Power Fin.Corpn.

Power Finance Corporation delivered a robust performance in FY26, reporting its highest ever standalone net profit of INR 20,051 crore, a 16% increase year-on-year. This was supported by a 13% growth in net interest income and significant provision reversals totaling around INR 1,800 crore. Consolidated PAT reached INR 33,625 crore, marking it as the highest among NBFCs. Asset quality saw substantial improvement, with net NPAs at a new low of 0.13% and gross credit impaired assets at 1.09%, following the successful resolution of 80% of the peak NPA book, including Sinnar Thermal (INR 3,001 crores) and TRN Energy (INR 1,139 crores).

PFC is actively pursuing a strategic merger with REC, targeting completion by April 1, 2027. This initiative, announced in the Union Budget, aims to create a unified institution with a combined loan book of approximately INR 11 lakh crore, enhancing scale, capital efficiency, and financing capabilities for India's power sector. The merger is subject to various regulatory approvals from MCA, RBI, SEBI, cabinet, and presidential approval. Management confirmed the government's commitment to maintain the merged entity's status as a government company, addressing concerns about shareholding dilution.

The company's loan book grew 7% in FY26, reaching INR 5.8 lakh crore, with disbursements totaling INR 1,65,414 crores. However, this growth was impacted by significant prepayment pressures, particularly in the commissioned renewable segment, where banks aggressively refinanced assets. Management noted that without these prepayments, loan asset growth would have been in the 10-11% range. For FY27, PFC is targeting a loan growth of around 10%, anticipating a moderation in prepayment pressures as the RBI is expected to maintain a neutral stance on repo rates.

As of March 31, 2026, PFC's total outstanding borrowing stood at INR 4,88,500 crore, with a domestic-foreign mix of 80:20. A substantial 65% of liabilities are fixed-rate, providing stability against interest rate fluctuations. The company's foreign currency borrowing, equivalent to USD 10.3 billion, is 97% hedged against exchange rate volatility through various derivative structures. The borrowing strategy is diversified, with 60% from the bond market, 20% from term loans, and 20% from foreign currency, balancing cost optimization and fund diversification.

PFC is strategically evolving its lending portfolio, with generation now accounting for approximately 50% (16% renewable) and an increasing focus on the distribution sector. The company is actively sanctioning projects in emerging areas such as battery and pump storage, having committed around INR 16,000 crores. It is also exploring opportunities in nuclear power, solar value chain manufacturing, bioethanol, and electric vehicles, aligning with India's energy transition and 'Viksit Bharat 2047' vision, aiming for a diversified mix of opportunities across sectors.

Distribution companies (DISCOMs) demonstrated improved performance, with AT&C losses reduced to 15.04%, moving closer to the 12-15% target under the RDSS scheme. For the first time at an all-India level, DISCOMs reported a positive profit after tax of approximately INR 2700 crore. This improvement is attributed to various interventions under the RDSS scheme, including advance subsidy payments, the implementation of prepaid meters for government departments, and solarization initiatives like the KUSUM scheme, collectively reducing operational costs and subsidy burdens.