PFC Stock May Become a Runaway Winner

PFC(Power Finance Corporation) have been in the long term down trend since May 2017. It made a high of 168.85 in May 2017 and made a low of 67.5 in July 2017 that is more than 60% correction from the May 2017 high and July 2018 low. We have found an amazing price movement from the mid 2013 to mid 2018. In July 2013 stock took support around the all time Low. Form the low of 2013 stock had rallied more than 200% and made the high of 172.4 in June 2014. After that high it retraced around 35% from its high and bounced back from the 50% Fibonacci Retracement that starched from the low of 2013 to the high of 2014, to the 157, but failed to made a new high and went into the long term down trend. In 2016 it got consolidate for the first half of the year and formed Inverse Head and Shoulder Pattern. The breakout of the pattern confirmed the trend reversal and stock and stock rallied more than 30% from the low of 2016 and made a high of 168 in 2017. After making a high of 168 it halted there for few weeks and corrected and corrected around 30% from the its 2017 high and bounced back to the 150 level but again it failed to cross its 2017 high. From the lower high(150) of 2017 it turned into downtrend and in 2018 it made a low of 67.5. Again the stock is trading around the level from where it had 90% from 2016-2017. For last 3 month it has been consolidating and forming a Inverse Head and Shoulder Pattern. The breakout of the pattern would confirm the trend reversal in the stock. If the stock confirmed the trend reversal we are expecting 150 level. 150 level is the Fundamental Target according to the Book Value.

Fundamental View

The stock is currently trading at 82. The market cap of the company is 22942 Cr and the Outstanding shares of the company is 264 Cr. The promoter held over 65% stake of the company. The 52 Week High and Low of the stock is 168 and 67.5 Power Finance Corporation is currently trading at the attractive valuation compared to its peers. Currently the stock is trading at 0.54 X of its Book Value 150. The EPS of the company is 22.13 higher than its peer companies exept REC. The Stock is trading at the P/E of 3.66 X, below the Industry Average P/E of 4.97. The company is giving the dividend of 7.5 and the dividend yield of the stock is 9.6%. It has higher Return on Eqiuty and Profit Margin Ration of 14.6% and 64%. The Current Ratio of the company is 5.89 X. The company has an impressive Earning Growth Ratio of 175% from its last year Earning and has attractive PEG Ratio (Price to Earnig Growth Ratio) of 0.02. The lower P/B, PE and PEG ratio signifies that the stock is undervalued and could be a Out Performer in long term. We are expecting 150 level for 1 Year.