PFC shares tumble 5% to 4-month low after weak Q1 earnings. Why Motilal Oswal still recommends Buy

The shares of Power Finance Corporation (PFC) dropped more than 5% on Monday after the company reported a 2% year-on-year increase in consolidated net profit to Rs 7,012 crore for the first quarter of FY27, with Motilal Oswal Financial Services slashing earnings estimates.

PFC shares dropped to Rs 398 apiece on the NSE on Monday morning, the lowest level seen by the stock in more than four months. On Friday, the company reported a slight decline in revenue from operations to Rs 28,527 crore in Q1 FY27, from Rs 28,539 crore in the corresponding quarter of the previous financial year.

Along with the Q1 results, PFC announced an interim dividend of Rs 3.90 per share with a face value of Rs 10 each for the ongoing financial year 2027. The record date to determine the eligibility of shareholders set to receive the dividend has been fixed on August 27 (Thursday).


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Motilal Oswal on PFC share price

Motilal Oswal Financial Services noted that the company’s standalone net profit grew nearly 5% YoY to Rs 4,750 crore, beating estimates. Net interest income (NII), however, declined 4%, missing expectations.

PFC indicated that the decline in lending yields during the quarter was in line with expectations, reflecting lower lending rates on both the existing and incremental loan portfolio amid the declining interest rate environment, Motilal noted. Going forward, the company will continue to calibrate its lending rates in line with market conditions while balancing growth and spreads, it added.

The domestic brokerage cut its FY27 and FY28 EPS estimates for PFC by 2% and 5%, respectively, primarily to reflect lower loan growth and margin contraction, partly offset by lower credit costs. It maintained its ‘Buy’ rating on PFC shares, but reduced its target price to Rs 500 per share. This implies upside potential of more than 19% from the stock’s previous closing price of Rs 420 per share on NSE.

PFC share price

PFC shares have fallen more than 5% in a week and nearly 2% in a month, but have overall gained nearly 10% in 2026 so far. This comes as the company heads for its mega merger with REC.

In the longer term, PFC shares have fallen 1.45% over one year, but delivered positive returns of 87% over three years and more than 288% over five years. The company currently has a market capitalisation of nearly Rs 1.32 lakh crore.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)