POWER FINANCE CORPORATION 2023-24 Annual Report Analysis

Thu, 1 Aug

POWER FINANCE CORPORATION has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during the year 2023-24.

POWER FINANCE CORPORATION Income Statement Analysis

• Interest income during the year rose 17.4% on a year-on-year (YoY) basis.
• Interest expenses were up by 23.3% YoY during the same period.
• Operating expenses declined by 60.0% YoY during the year.
• The company's net interest income (NII) increased by 8.4% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a decline and stood at 3.3% in FY24 as against 3.5% in FY23.
• Other income increased by 398.3% YoY during the year.
• Net profit for the year increased by 24.4% YoY.
• Net profit margins during the year increased to 21.7% in FY24 from 20.5% in FY23.

POWER FINANCE CORPORATION Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	775,683	910,967	17.4%
Other Income	Rs m	4,649	23,162	398.3%
Interest Expense	Rs m	470,258	579,865	23.3%
Net Interest Income	Rs m	305,425	331,103	8.4%
Operating Expense	Rs m	44,595	17,848	-60.0%
Pre-provision Operating Profit	Rs m	265,479	336,417	26.7%
Provisions & Contingencies	Rs m	233	316	35.7%
Profit before tax	Rs m	264,961	335,881	26.8%
Tax	Rs m	53,175	71,269	34.0%
Profit after tax	Rs m	158,893	197,612	24.4%
Minority Interest	Rs m	-52,893	-67,000	-26.7%
Net Interest Margin	%	3.5	3.3
Net profit margin	%	20.5	21.7

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POWER FINANCE CORPORATION Balance Sheet Analysis

• The company's deposits during FY24 stood at Rs 0 m as compared to Rs 0 m in FY23, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 9,691.1 bn as compared to Rs 8,329.0 bn during FY23, a rise of 16.4%.
• Cost of deposits for POWER FINANCE CORPORATION rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 415.6 bn during the year from Rs 364.7 bn in FY23.
• Borrowing stood at Rs 122.8 bn, a growth of 79.3% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 10,328.2 bn as against Rs 8,887.7 bn during FY23, thereby witnessing a rise of 16.2%.

POWER FINANCE CORPORATION Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	841,585	1,011,468	20.2%
Advances	Rs m	8,329,034	9,691,112	16.4%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	364,689	415,550	13.9%
Borrowings	Rs m	68,511	122,830	79.3%
Total Assets	Rs m	8,887,718	10,328,214	16.2%

Current Valuations for POWER FINANCE CORPORATION

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 59.9, an improvement from the EPS of Rs 60.2 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 553.0, stands at 5.0 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.8 times, while the price to income ratio stands at 1.1 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	293.8	276.0
Earnings per share (Unadj.)	Rs	60.2	59.9
Diluted earnings per share	Rs	48.1	59.9
Avg P/E ratio	Rs	2.2	5.0
Avg P/ABV ratio	Rs	0.8	1.8
Avg Market Cap	Rs	353,375	988,562
Dividends per share (Unadj.)	Rs	13.25	13.50

Ratio Analysis for POWER FINANCE CORPORATION

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 969,111,150.0x during FY24, from 832,903,360.0x during FY23. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 0.12x during FY24, from 0.08x during FY23. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): POWER FINANCE CORPORATION's capital adequacy ratio (CAR) was at 25.4% as on 31 March 2024 as compared to 24.4% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company improved and stood at 19.5% during FY24, from 18.9% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 1.91% during FY24, from 1.79% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 10.39% during FY24, from 9.57% during FY23. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. POWER FINANCE CORPORATION's gross NPA ratio stood at 4.2% as of 31 March 2024 compared to 4.7% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of POWER FINANCE CORPORATION was 1.7% in financial year 2024. This compared with 1.9% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	832,903,360.0	969,111,150.0
Debt to Equity Ratio	x	0.1	0.1
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	24.4	25.4
Return on Equity	%	18.9	19.5
Return on Assets	%	1.8	1.9
Return on Capital Employed	%	9.6	10.4
% of Gross NPAs	%	4.7	4.2
% of Net NPAs	%	1.9	1.7
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how POWER FINANCE CORPORATION has performed over the last 5 years, please visit here.

POWER FINANCE CORPORATION Share Price Performance

Over the last one year, POWER FINANCE CORPORATION share price has moved up from Rs 207.1 to Rs 553.0, registering a gain of Rs 345.9 or around 167.1%.

Overall, the S&P BSE SENSEX is up 23.2% over the year.

(To know more, you can check out historical annual results for POWER FINANCE CORPORATION here and quarterly results for POWER FINANCE CORPORATION here)