Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Power Finance Corp Ltd (BOM:532810, Financial) achieved the lowest gross NPA ratio of 2.71% since FY 2019, indicating improved asset quality.
- The company executed the largest ever foreign currency term loan deal by an Indian PSU, amounting to $1.265 billion.
- Consolidated profit after tax increased by 14% year-on-year, reaching INR 14,397 crores for H1 2025.
- The company's loan asset book grew by 13% year-on-year, showcasing robust business growth.
- Power Finance Corp Ltd declared an interim dividend of INR 3.5 per share, reflecting a commitment to shareholder returns.
Negative Points
- Despite strong disbursements, the loan growth was only 10% due to higher repayments, particularly in the renewable and distribution sectors.
- The company faced challenges in asset resolution, with some recoveries remaining unallocated pending final NCLT orders.
- There is a cautious approach towards new infrastructure projects, with the board deciding against sanctioning certain loans.
- The company's growth projections are considered conservative by some analysts, potentially underestimating market opportunities.
- The capital adequacy ratio decreased from 27% to 24.38%, indicating a need for careful capital management amidst growth.
Q & A Highlights
Q: What is the projected growth for the Gujarat IFSC branch over the next 12 years, and do you plan to fund foreign or Indian companies in their abroad projects?
A: We have just received the certificate for commencement of business. We plan to disburse loans to various infrastructure sectors, including the power sector, targeting both domestic and foreign companies. We can only disburse in foreign currency from IFSC, and our operations will depend on the capital we infuse. There is a tax holiday of 10 years in IFSC Gift City, but it's difficult to predict profit margins at this stage.
Q: Have there been higher repayments in the renewable or distribution sector, given the 10% loan growth despite increased disbursals?
A: Our recoveries were scheduled higher in the first half compared to the second half, which is why the growth isn't as visible despite disbursing around 64,000 Crore. The repayment schedule impacted the loan growth figures.
Q: Can you provide an update on the KSK project and the expected recovery?
A: For the KSK project, our recovery is expected to be more than the claim amount. We are in the process of evaluating bids, and once finalized, we will submit it to NCLT. The timeline for resolution depends on NCLT approval.
Q: What is the expected loan growth for FY25, and how does it compare to previous years?
A: We expect loan growth to be similar to last year, around 14%. As our base expands, higher growth percentages may not be feasible. Our disbursements last year were substantial, and future growth will depend on economic and infrastructure sector developments.
Q: How do you see margins trending for the second half of the year?
A: We expect margins to remain within the 3% to 3.5% range. The exact position within this range will depend on growth numbers. In the first half, we were slightly above 3.5%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
