Power Finance Corporation (PFC) shares surged nearly 6% on Friday, reaching an intraday high of ₹412, after the Reserve Bank of India (RBI) announced revised guidelines on project finance — a move seen as highly favorable for infrastructure-focused lenders.
This sharp rebound comes despite recent underperformance in the stock. PFC has declined 9.14% over the past six months and 14.44% over the past year, reflecting pressure from sectoral concerns and high provisioning requirements. Friday’s rally, however, marks a significant shift in sentiment.
The catalyst was the RBI’s decision to ease provisioning norms for under-construction infrastructure projects. Under the previous framework, financial institutions, including NBFCs like PFC, were required to maintain high provisions for loans to under-construction assets — even if repayments weren’t yet due. This constrained their ability to extend fresh credit.
With the updated guidelines, lenders will now be required to set aside a smaller capital buffer for such loans, freeing up liquidity for new project lending. The move is expected to stimulate credit flow into key infrastructure sectors such as power, housing, transport, and energy, where PFC is a major player.
Given PFC’s strategic role in long-tenor funding of power and energy projects, many of which remain under construction for extended periods, the relaxed norms directly improve its lending capacity, balance sheet efficiency, and return profile.
Analysts view the RBI’s policy shift as a structural positive for infrastructure financing. By reducing the regulatory burden, it may accelerate project execution timelines, lower the cost of capital, and improve investor sentiment toward lenders like PFC.
Investor reaction was swift, with increased buying interest helping PFC recover part of its recent losses. The stock’s performance now places it on the radar for potential near-term upside, particularly if infrastructure credit demand gains momentum under the new regime.
