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PFC Exposure to Bad Loans: Will it Affect Stock Price?

News

Despite being a niche lender, Power Finance Corp. (PFC) has admirably weathered the turbulent situation in the country’s power industry. So far, at least its return on equity continues to be in the high teens. Yet, it is not as if the company has been totally insulated from the grief surrounding the power sector. 
Source: Mint

SNP Insights

PFC exposure to loan of about 9.4% as restructured loan, 1.1% as bad loans and around 70% of its loan toward state uitlities with weak balance sheet is not likely to impact its stock price  in future courtesy RBI strategic debt conversion (SDR) and 5/25 scheme. As, this will give right to lenders to convert their outstanding loan into majority equity stock under SDR while 5/25 scheme would protect the lenders from 15% provision against such restructured loan. 

Also, It is backed by the sovereign guarantee which may act as shield against such riskier investments.
Source: SNP Infra Research