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Power Finance Corporation Limited NCD IPO – July 2023

Bond Overview

Non-Convertible Debentures are issued by Power Finance Corporation Limited. These NCDs have been rated AAA/Stable by CRISIL, ICRA, and CARE. The NCDs are issued in three series, with coupon rates ranging from 7.45% to 7.550% per annum and maturities of 3, 10, and 15 years. The NCDs are redeemable and secured by nature. The issue opening date is July 21, 2023, and the closing date is July 28, 2023.

Issue OpenJul 21, 2023 – Jul 28, 2023
Security NamePower Finance Corporation Limited
Security TypeSecured, Redeemable, Non-Convertible Debentures (Secured NCDs)
Issue Size (Base)Rs 5,000.00 Crores
Issue Size (Shelf)Rs 10,000.00 Crores
Issue PriceRs 1000 per NCD
Face ValueRs 1000 each NCD
Minimum Lot Size10 NCD
Market Lot1 NCD
Listing AtBSE
Credit RatingCARE AAA, Stable by CARE Ratings Limited, CRISIL AAA/Stable by CRISIL Limited and ICRA AAA, Stable by ICRA Limited
Tenor3, 10, and 15 years
SeriesSeries I to III
Payment FrequencyAnnually
Basis of AllotmentFirst Come, First Serve Basis
Debenture Trustee/sBeacon Trusteeship Limited

About The Company

In 1986, Power Finance Corporation Limited (PFC) was established as one of India’s leading financial companies. It focuses on the energy industry. PFC collaborates with Government of India agencies, state governments, power sector utilities, other power sector intermediaries, and private sector customers to develop and implement structural and procedural reforms in the Indian power sector. PFC is registered with the RBI as a systemically significant non-deposit-taking NBFC. The Government of India conferred ‘Navratna’ status to PFC in 2007.

PFC offers a variety of financial products and additional services, such as

  1. Services ranging from project conception to post-commissioning include conventional and renewable generation, transmission and distribution projects, and related renovation and modernization projects;
  2. Diverse forms of fund-based assistance, including long-term project financing, short-term loans, purchasers’ credit lines, debt underwriting, and debt refinancing schemes;
  3. Numerous forms of non-fund-based assistance, such as payment default guarantees, credit enhancement guarantees, and letters of comfort.
  4. Our wholly-owned subsidiary PFC Consulting Limited offers various fee-based technical advisory and consulting services for undertakings in the power sector.

According to Public Enterprises, PFC is one of the top ten most profitable CPSEs for the fiscal year 2021–2022.

Survey 2021–22 is a document published by the Department of Public Enterprises of the Ministry of Finance. In October 2021, PFC was awarded Maharatna Status, the highest distinction a CPSE can receive.

According to Forbes Global 2021, in terms of its balance sheet assets, PFC ranks 365th in the globe. PFC is ranked number 34 on the Fortune 500 India 2022.

In the fiscal year 2021–2022, PFC recorded its highest-ever net profit of Rs. 10,022 crores, the largest consolidated balance sheet size of all Central Public Sector Enterprises (CPSEs).

Company Strengths

1. PFC provides its power industry clients with a vast array of financial products in addition to consulting and other services.

2. PFC has played a crucial strategic role in GoI programs geared at promoting and developing India’s power sector for more than three decades. 

3. The capacity to generate capital through public offerings has been used to support the belief that capitalization will remain adequate over the medium term.

4. 57% of borrowings are from bonds, 20% from term loans, and 1% from other sources, which is a sufficient combination.

Company Weakness

The intrinsic vulnerability of PFC’s asset quality to borrowers with low credit risk profiles persists. As of September 30, 2022, 88 percent of the company’s total loan portfolio was comprised of loans to government sector power utilities.

Objectives of the Issue

For the purposes of onward lending, financing/refinancing the company’s existing debt, and/or debt servicing (payment of interest and/or repayment/prepayment of interest and principal of the company’s existing borrowings), and for general corporate purposes, the company intends to use the net proceeds from the offering to finance these objectives.

Allocation Ratio

In compliance with the regulations set forth by SEBI, the allocation ratio is calculated. Before the allocation ratio may be publicised, it must first receive authorization from SEBI.  After the close of the subscription period for the initial public offering (IPO), the applications will be sorted into their respective categories. During the launch of an initial public offering (IPO), the category-by-category allocation ratio is always determined and published. Applicants will be given units to which they are entitled after taking into consideration the Allocation Ratio. For a visual representation of the PFC NCD-IPO application ratio, see the pie chart.

NCD Ratings

The NCDs proposed for issuance under the offering have received the following ratings: “CARE AAA, Stable” from CARE Ratings Limited, “CRISIL AAA/Stable” from CRISIL Limited, and “ICRA AAA/Stable” from ICRA Limited.

Company Promoters

The President of India, acting through the Indian Ministry of Power, is the promoter of the corporation.

Financial Performance

For the last three fiscal years, PFC has reported consolidated total income/net profits of Rs. 71,700.67 crore/Rs. 15,716.20 crore (FY21), Rs. 76,344.92 crore/Rs. 18,768.21 crore (FY22), and Rs. 77,625.19 crore/Rs. Consequently, both the company’s top and bottom lines exhibited an upward trend.

Issue Evaluation 

1. Secure: CRISIL has assigned PFC a AAA/Stable rating, indicating that it is a very secure investment. The senior secured nature of these NCDs provides an additional layer of protection for your investment.
2. An opportunity to invest in one of India’s premier NBFCs. The option to invest in both immediate and long-term terms.
3. Incorporating NCDs rated AAA/Stable into a portfolio can diversify risk, particularly for investors with high exposure to equities or other high-risk assets.
1. NCDs typically offer lower rates of return than other categories of investments, such as stocks and mutual funds.
2. Incorporating NCDs rated AAA/Stable into a portfolio can diversify risk, particularly for investors with high exposure to equities or other high-risk assets.

How do I apply on the BondsIndia website?

Apply fast by following the instructions below: 

  1. Visit our official website: BondsIndia
  2. Select the series under Public Issue Bonds,
  3. Complete PAN and Demat account details,
  4. Enter your UPI number,
  5. Approve the payment mandate.

The Conclusion

When it comes to financing the power sector in India, PFC Group stands head and shoulders above the competition. PFC is a public enterprise and public financial institution of the Government of India (“GoI”), as defined by the Companies Act of 2013. The Company is listed with the RBI as a non-deposit-accepting NBFC. Given its AAA/Stable rating from CRISIL and ICRA, investors desiring a stable income may store funds for the intermediate to long term. However, informed investors may consider investing for returns over the medium to long term.