Despite these significant gains, many experts continue to view the stock as an appealing long-term investment opportunity.
PFC share price rose almost 3 per cent in intraday trade on BSE on Friday, May 17, looking set to extend its winning streak into the fourth consecutive session, buoyed by the company’s impressive March quarter result.
The company on Wednesday, May 15, said its Q4FY24 consolidated net profit rose 23.29 per cent to ₹7,556.43 crore from ₹6,128.63 crore a year ago. The company reported revenue from operations of ₹24,141.40 crore, a 20.34 per cent increase year-on-year.
Also Read: PFC reports 25% rise in FY24 net profit to ₹26,461 crore
A buy after Q4 result?
Experts are largely positive about the stock for the long term. However, given its steep gains in the last one year, some profit booking at the current level is logical.
Fundamental views
Elara Capital
Brokerage firm Elara Capital has a buy call on the stock with a target price of ₹569, implying a 30 per cent upside potential.
Elara maintained GNPA estimates at 3.0-2.8 per cent for FY25E/26E and raised credit cost estimates in line with the spike in standard asset provisions. However, it has not yet baked in write-backs into estimates.
Elara trimmed PFC’s FY25E growth estimate to 14 per cent per guidance and maintained a 15 per cent loan CAGR thereafter.
“Despite trimming growth guidance to 14 per cent YoY for an immediate period, we draw comfort from PFC’s prudent approach despite the ability to chase growth. Our estimates are largely unchanged. We now envisage 14-15 per cent loan CAGR, 19 per cent NII CAGR, and steady NIMs at 3.6 per cent, translating into 2.8 per cent RoA (return on assets) and 17 per cent RoE (return on equity) in FY24-26E,” said Elara.
Amit Goel, Co-Founder & Chief Global Strategist, Pace 360
Goel said PFC’s fundamentals are quite strong, as the company’s asset quality has improved significantly. Additionally, PFC offers one of the highest dividend yields among listed companies.
The emerging trends in the power sector provide confidence in PFC’s ability to grow faster than the sector.
However, Goel underscored the stock may correct from the current level, considering the stock has risen by almost 400 per cent over the past two years, the Indian markets are currently trading at overvalued levels, and FIIs have been net sellers for the past 7-8 weeks.
Technical views
Technical experts say that PFC’s current technical indicators highlight its bullish potential. Key support and resistance levels offer strategic entry and exit points for both existing and new investors.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers
Patel pointed out that recently, PFC stock experienced a notable reversal after finding support at the 21-day simple moving average (SMA). This reversal followed a significant correction, during which the stock dropped by 80 points or approximately 17 per cent.
After this correction, PFC staged an impressive recovery.
He observed that the daily stochastic indicators have shown a hidden bullish divergence. This divergence signals that, despite some bearish price movements, there is an underlying bullish bias, suggesting that the recent downtrend may not be as strong as it appears and that the stock could sustain its upward momentum, said Patel.
“A bearish gap observed on May 6, 2024, could act as a short-term resistance level around the ₹468 mark. Investors might anticipate a minor pullback when the stock approaches the resistance level of ₹468. Following this brief consolidation, PFC is expected to continue its upward trajectory, maintaining the bullish trend indicated by the technical signals,” said Patel.
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Deven Mehata, an equity research analyst at Choice Broking
Mehata underscored that the stock’s robust support at ₹407, aligning with its 50-day exponential moving average (EMA), provides a solid foundation. Trading above its short-term (20-day), medium-term (50-day), and long-term (200-day) EMAs further underscores its bullish momentum.
As per Mehata, on the upside, PFC faces resistance in the ₹480-485 range, which corresponds to its all-time high levels. Should the stock surpass this resistance, it has the potential to climb towards a target of ₹540. This outlook suggests substantial room for growth, contingent on overcoming the critical resistance barrier.
Mehata said investors holding PFC from lower levels should consider booking partial profits at current levels while maintaining a trailing stop loss at ₹407 to secure gains.
For those looking to initiate new positions, Mehata said waiting for a dip near ₹440 would be prudent. The target for new investments remains ₹540, reflecting a favourable risk-reward ratio.
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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.
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Published: 17 May 2024, 02:30 PM IST
