Strong growth outlook: The surge in power sector projects in the past few years,
especially from the private sector, has led to a sharp increase in funding
requirements, visible in PFCs huge outstanding loan sanctions of Rs1.7lakh crore.
This alone provides high loan growth visibility in the next few years (we have
factored in a 25% CAGR in loan growth over FY2012–13E). Moreover, with banks
having seen a 47% CAGR in power sector lending in the past two years, their
exposures in most cases have reached close to board-mandated limits, creating
even more space for specialised lenders such as PFC to grow. This will be further
aided by the companys expanded net worth post the FPO and higher
concentration limits pursuant to an infrastructure finance company (IFC) status.
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