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Earnings rebound seen for PFC, REC by 2020-21 on 50-60% NPA provision

Though analysts have turned positive, stocks remain prone to asset quality shocks

Power Finance Corporation, PFC, PFC logo

After underperforming the broader markets, stocks of power financiers Power Finance Corporation (PFC) and REC (formerly Rural Electrification Corporation) are figuring in the return charts. The two stocks have gained 24-30 per cent each over the past year, though the Street was not too positive after their merger was announced in November last year.   While there hasn’t been a material change in financials, asset quality issues and state utilities, including state electricity boards (SEBs) making fresh investments, are leading to the Street’s optimism.   CLSA, which ...