New Delhi: Power Finance Corporation’s (PFC) standalone profit for FY2025-26 grew 15.6 percent year-on-year, with a particularly strong Q4. Loan book expansion continued, asset quality improved on paper, but finance costs are rising faster than revenue and operating cash flow remains deeply negative at the standalone level.
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PFC’s standalone revenue from operations rose 10.2 percent to Rs 58,503.73 crore, driven primarily by interest income which grew from Rs 49,874.70 crore to Rs 55,072.80 crore — a 10.4 percent increase. Dividend income also expanded meaningfully, from Rs 2,992.30 crore to Rs 2,952.46 crore.
Finance costs — the single largest expense line — grew 8.7 percent to Rs 33,176.92 crore. While this is slower than revenue growth, it consumed 56.7 percent of total revenue from operations in FY26. As PFC continues to grow its borrowing base, interest cost management will be key to sustaining margin expansion.
A large impairment reversal of Rs 1,816.36 crore in FY26, compared to a provision charge of Rs 457.11 crore in FY25, materially boosted PBT by roughly Rs 2,273 crore. This is a key non-cash contributor to the profit beat; the underlying operating profit growth, while solid, is partially flattered by this reversal.
The March quarter was PFC’s standout quarter for the year. Standalone PAT of Rs 6,324.57 crore surged 23.8 percent year-on-year (vs Rs 5,108.95 crore in Q4 FY25) and 32.8 percent sequentially (vs Rs 4,763.33 crore in Q3 FY26). Revenue from operations grew modestly — 2.5 percent YoY and 4.5 percent QoQ — suggesting the profit jump was driven by cost dynamics and the impairment line rather than top-line acceleration.
Net translation/transaction exchange loss jumped to Rs 308.89 crore in Q4 FY26, up from Rs 261.38 crore in Q4 FY25 and Rs 127.60 crore in Q3 FY26 — a sign of growing exposure to currency volatility on foreign currency borrowings. For the full year, this line hit Rs 1,588.31 crore vs Rs 466.78 crore in FY25 — a more than 3x rise that deserves monitoring.
At the group level — which includes REC Limited (the largest subsidiary) and PFC Consulting — revenue from operations grew 8.4 percent to Rs 1,15,443.61 crore and PAT grew 10.2 percent to Rs 33,625.34 crore. Profit attributable to equity shareholders of the company rose 12.7 percent to Rs 25,900.95 crore, with the remainder accruing to non-controlling interests (principally REC minority shareholders).
Unlike the standalone picture, the consolidated Q4 tells a more subdued story. Group revenue from operations was essentially flat — Rs 28,919.52 crore, down 1.2 percent YoY (Rs 29,265.03 crore in Q4 FY25) and down 0.6 percent QoQ (Rs 29,094.81 crore in Q3 FY26). PAT grew a modest 2.9 percent YoY and 4.7 percent QoQ. This divergence between standalone strength and consolidated flatness at the revenue level warrants scrutiny — it may reflect muted performance at REC or intercompany dynamics.
On the surface, PFC’s asset quality improved sharply. Standalone gross NPA ratio stood at 1.09 percent vs 2.65 percent last year, and net NPA at 0.15 percent vs 2.65 percent (Stage 3 coverage ratio rose to 86.17 percent). Consolidated gross NPA was 0.66 percent and net NPA 0.13 percent, both better than FY25 levels. The total impairment loss allowance on the standalone book fell from Rs 14,366.05 crore to Rs 10,398.76 crore — a reduction of nearly Rs 4,000 crore.
Stage 3 (NPA) loan outstanding at the standalone level fell from Rs 10,516.85 crore to Rs 6,322.58 crore — a meaningful reduction. However, the standalone impairment loss allowance coverage on Stage 3 loans remains at 86.17 percent, meaning roughly 14 percent of Stage 3 loans are uncovered by provisions. Separately, the impairment allowance on letters of comfort and undrawn commitments has grown (Rs 21.40 crore + Rs 134.52 crore for standalone; Rs 54.94 crore + Rs 417.23 crore for consolidated results), pointing to rising contingent credit risks off the balance sheet.
PFC’s standalone total assets grew 7.0 percent to Rs 6,18,514.68 crore. Loans, the core asset, expanded 7.7 percent to Rs 5,74,018.10 crore. Equity strengthened from Rs 90,936.87 crore to Rs 1,02,531.94 crore, giving a standalone debt-equity ratio of 4.75x. The CRAR of 23.44 percent is well above regulatory minimums. The company confirmed it has not defaulted on any borrowings in FY26. Security cover on listed NCDs is 1.02x to 1.03x — adequate but not particularly cushioned.
PFC’s standalone operating cash flow was negative Rs 7,335.67 crore in FY26. While this is a dramatic improvement over the negative Rs 50,365.47 crore in FY25, the company continued to fund its loan book growth through financing activities — raising Rs 8,926.80 crore net from bonds, loans and other instruments. Cash and cash equivalents at year-end stood at just Rs 1,078.31 crore vs Rs 22.03 crore at the start of the year — the sharp rise is largely from Rs 1,066.34 crore in bank deposits with maturity up to three months.
At the consolidated level, operating cash outflow was Rs 4,504.50 crore vs Rs 92,270.02 crore outflow in FY25 — again, a sharp improvement, driven by slower loan book growth relative to the prior year’s massive expansion.
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The Board has recommended a final dividend of Rs 3.95 per equity share (face value Rs 10) for FY26, subject to shareholder approval at the upcoming AGM. This is in addition to four interim tranches totalling Rs 14.60 per share already paid during the year. The total FY26 dividend payout would thus be Rs 18.55 per equity share.
