Financial services firm Bernstein has adjusted its expectations for Power Finance Corporation (PFC) and REC, opting to reduce price targets while maintaining an 'Outperform' rating. The adjustment reflects a cautious outlook on the firms' ability to maintain aggressive loan growth in a shifting market.
The brokerage firm cited heightened competition from commercial banks as a primary factor, noting that traditional banking institutions are increasingly encroaching on the lending space previously dominated by these power sector financiers. This competitive pressure, combined with a slower-than-expected rollout of new renewable energy projects, has led to a revised growth forecast.
Revised estimates for FY26 through FY28 suggest a more conservative loan-book expansion of 7%. Bernstein's new target prices are set at Rs 465 for PFC and Rs 410 for REC, signaling a recalibration of market expectations for these state-run entities.
Additionally, while the improved financial position of state-owned electricity distribution companies (DISCOMs) is viewed positively, analysts suggest it may not be enough to offset the broader challenges in the power financing landscape. Investors are now monitoring how these firms will navigate a market that demands greater agility to sustain long-term growth.
