PFC enters the club of 50 most valued firms; REC m-cap crosses Rs. 1 trillion (US$ 13.5 billion)
- IBEF
- December 5, 2023
State-owned power finance companies witnessed a significant share surge during Monday's trade. Power Finance Corporation (PFC) reached Rs. 386.30 (US$ 5.2), and REC reached Rs. 393.05 (US$ 5.3), marking new highs with a robust uptrend of up to 6% on the BSE, driven by a positive business outlook. Over the last month, PFC's stock price rose by 47%, while REC experienced a 29% increase, outperforming the S&P BSE Sensex, which showed a 5% gain. Since April in the current financial year, REC exhibited an impressive 240% surge, while PFC recorded a substantial 155% increase, notably surpassing the benchmark index's 16% rally.
A surge lifted PFC into the top 50 companies by market cap, ranking 50th at Rs. 1.26 trillion (US$ 17 billion). REC hit a milestone, reaching an M-cap of Rs. 1 trillion (US$ 13.5 billion). PFC holds 52.63% of REC's equity. REC, an NBFC and IFC, finances power, logistics, and infrastructure. PFC's portfolio offers financial products for power projects. It functions as a vital player in government policy implementation in the power sector, serving as the nodal agency for schemes like UMPP, RDSS/IPDS, LIS, LPS, and a bid process coordinator through PFC Consulting Limited for the ITP scheme.
The Government's emphasis on increasing India's green energy share aligns with the commitment to achieve net zero by 2070. Initiatives like "Make in India" and the Production-Linked Incentive scheme are set to boost demand, with a projected 7.18% CAGR in electricity consumption until 2027. To meet this rising demand, the Government aims to double installed capacity, adding around 500 GW by 2032, with 87% from non-fossil fuel sources. This requires an estimated investment of approximately Rs 31 trillion, as per PFC's FY23 annual report.
REC recently reported crossing a disbursement of Rs. 1 trillion (US$ 13.5 billion) in a year, compared to Rs. 46,075 crore (US$ 620 million) in the corresponding period of FY23. REC's board approved a revision in its market borrowing program from Rs. 1.2 trillion (US$ 16 billion) to Rs. 1.5 trillion (US$ 20 billion) for FY24, reflecting its strategic importance in the power sector. Care Ratings anticipates REC's crucial role in the power sector to persist, considering its strategic importance to the Government of India.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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