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Buy Power Finance Corporation; target of Rs 480: ICICI Securities

  //business-finance.news-articles.net/content/202 .. rporation-target-of-rs-480-icici-securities.html
  Published in Business and Finance on Monday, November 10th 2025 at 10:51 GMT by moneycontrol.com

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ICICI Securities’ Rationale

ICICI Securities, one of the country’s leading equity research houses, underscored BPFC’s dominant market position in the power‑financing niche. With a portfolio that spans hydro, thermal, and renewable generation projects, BPFC has consistently maintained a low non‑performing asset (NPA) ratio, hovering below 4% in FY 2023. The brokerage highlighted the company’s focus on “quality over quantity” – a prudent approach that has helped it stay resilient during periods of credit tightening.

The target price of ₹480 reflects a 20‑plus percent upside from BPFC’s last closing price of ₹400, based on a price‑to‑earnings (P/E) ratio of 30×, compared to an industry average of 20×. ICICI Securities also pointed to the company’s projected revenue growth of 12%–15% year‑on‑year, driven by a surge in green‑energy projects and the government’s push for net‑zero commitments.

Financial Performance Snapshot

BPFC reported a net profit of ₹1.12 billion in FY 2023, up 18% from the previous year. Its loan book expanded by 8% to ₹1.1 trillion, with a loan‑to‑asset ratio of 55%. The company’s interest margin remained healthy at 7.5%, a testament to its disciplined underwriting and risk‑management practices.

The brokerage’s detailed analysis reveals that BPFC’s operating expenses have been held under 20% of revenue, providing a healthy operating margin of 10%. In addition, the company’s free cash flow generation has been positive for three consecutive years, offering ample scope for future dividend distributions or debt repayment.

Macro‑Policy and Sector Outlook

The Government of India’s “National Hydrogen Mission” and various renewable‑energy subsidies have created an ecosystem where power finance houses like BPFC can thrive. The Ministry of Finance’s latest budget announcement earmarked ₹1.5 trillion for renewable‑energy infrastructure, an initiative that is expected to funnel significant capital to the sector. BPFC’s existing renewable‑energy loan portfolio is positioned to capture this upside, as the company has a strong pipeline of solar and wind projects in the pipeline.

Furthermore, the Reserve Bank of India’s recent relaxation on liquidity requirements for specialized finance institutions has allowed BPFC to refinance at lower cost, enhancing its profitability.

Analyst Commentary

ICICI Securities’ research team also compared BPFC’s valuation against peer companies such as Power Finance Corporation, Indiabulls Power Finance, and Muthoot Finance. While the latter two have similar asset‑bases, BPFC’s lower NPA and stronger renewable exposure give it a competitive edge. The brokerage’s target of ₹480 is therefore consistent with the industry’s upward trend, though it acknowledges potential headwinds from rising interest rates and global commodity price volatility.

Investor Takeaway

The key takeaway for investors is that BPFC’s disciplined risk management, coupled with an expanding renewable portfolio, positions it well to capture the forthcoming boom in power financing. The ₹480 target reflects an optimistic but realistic assessment of BPFC’s growth trajectory, with a focus on sustainable, long‑term value creation.

Further Reading

To gain a deeper understanding of BPFC’s financials and sector position, investors can refer to the company’s latest annual report available on its investor relations page, which offers detailed breakdowns of loan‑book segments, asset quality, and future project pipelines. The company’s website also hosts an interactive dashboard showcasing real‑time loan disbursement data and sectoral exposure. Additionally, the Moneycontrol platform hosts a series of comparative analyses that place BPFC against its peers on various metrics such as NPA, loan‑to‑asset ratio, and earnings growth.

Overall, ICICI Securities’ bullish stance underscores the growing confidence in India’s power‑financing ecosystem and highlights BPFC as a standout player poised for sustained growth in the coming years.