Attended the chaotic AGM as usual due to notorious gift seekers of Delhi in garb of shareholders after wasting half a day in grinding traffic yet was important due to recent SC judgement. Queries though we’re nicely answered by PFS.
as per them not much impact on PFS of recent SC judgement. Only 3 projects impacted but all of them has tapered linkage from CIL for next few years so they foresee no asset quality concerns. In fact one affected player IMFA prepaid the complete loans a few days back.
they have 6000-6500 cr disbursal target from current year.
They may have to raise equity next year.
Demand is good specially for renewable energy loans with lot of quality players like GS , IFC pitching in with equity and coming to PFS for loan portion. Opp size huge in this sector of 2-2.25 lac crore .Cost is also now coming down from 10-11 cr per MW to 7-7.5 Cr per MW.
Renewable now 33% of cumulative sanctioned amount wile it’s 38% in outstanding PF n going to increase in future as well.
PFS unlike its govt sounding name is a private sector entity thanks to parent PTC equity structure where PSU stake is limited to only 16% n that too through 4 PSU . There are only 38-40 employees n most of them in the 30-32 age group.
crisil has given very high rating to PFS for both short n long term period. Pfs is able to raise loans from PSB n FIs at v competitive 10-10.25% base rates.
transmission network in TN is now stable n the wind farms there are able to offer the power to private secto too there vs to monopoly govt sector earlier.
all credit appraisal is done in house under a ex PWC CA who heads the risk deptt n he has veto power on all projects.
around 2000 cr sanctioned loans were cancelled due to lack of progress .
lot of state govts proactive in renewable energy like Gujarat, Maharashtra, AP,Raj n tariff being offered is now v competitive 5-5.7 Rs in wind n 7 Rs in solar sector.
No equity sale envisaged in current fin year.
PfS has no dividend policy but expected to maintain similar div payout ratio in future as well.
a separate co being planned for equity investments n likely to be formed in FY 15.
I think it’s clear to everyone that the results are better this quarter than a year ago if one removes the one-off sale a year ago. But ‘optically’ the PE was less earlier due to the one-off sale contributing to the E in PE since many people might not have had the one-off sale at the front of their mind in last 6-8 months. If someone is sticky about PE, the stock might now seem more expensive inspite of the growth.
I think, every stock takes breather/corrects and that includes the great ones like GRUH. For PFS, these corrections were there in every step of the way and the smart u turn from 60 suggests that better sense prevailed
In addition to the possibilities mentioned regarding optically low earnings in the absence of equity sale and a possible routine correction, I also feel that one contributing factor could be the weak oil prices.
The current focus of the management is on growing the clean energy portfolio, and with low oil prices the viability / attractiveness of these non-thermal power projects could reduce. This could moderate the level of disbursements and loan growth going forward. Atleast for the short term, till oil prices rebound and stabilizes (when would that happen is anybody’s guess).
Albeit, I also think that since there remains immense scope of thermal power projects for a power-starved country like India, and because PFS has a sizeable book and experience/expertise in this portion, they would not find it difficult to grow at projected rates even if clean energy project growth reduces temporarily.
Discl- invested from lower levels and may add upon further dips. but not a sizeable portion of the PF.
@Vinay your comment makes sense. PFS is also been multibagger for me and continue holding for longer term.
I think PFS is likely to be in range of 60 to 70 for a quarter and further should move based on new development. Recently bought big chunk at 62 level.
This is an online forum where everyone is expected to contribute their small might by adding in perspectives - please do not market yourself by posing soliticitory messages. This affects the flow of thought.
What is wrong with this stock, it keeps falling despite great results.
Management is strong, and investment portfolio can be monetized to provide incremental equity assets over time. Solar mission provides strong growth prospects, NPA position inspires confidence. Anybody heard anything?
@Anil, there is mostly retail holding. You can expect even lower levels if market sentiment continues the same. Overall the company will do good in long term but short term hard to predict where the bottom will come.
There is a one-time provisioning of 29 cr. v/s 9 cr in Q4FY14 and a one-time provisioning of 30 cr. for equity investment (42% of that project is up and running since many years). Apart from that the results seem very good. More importantly, when this thread was started in last April, the 2 main reasons were high CAR and nice valuation. The CAR is still 23.71% which leaves room for higher than normal growth.
The NPA bug and its quantum was a shocker. I am in this late and my average is pretty high. I have no other go but to down average and wait it out. The more I read the finer aspects, the more trouble ahead is sensed by me.
