Super 7 Picks - January 2016

amit.paprika

RR0201201688E62

2nd Feb ,

Power Finance Corporation Ltd

Buy

B P

W E A L T H

Finance

Technical View (Weekly Chart)

Execution Data

Target (Rs) 235

Parallel Trendlines

Stop Loss (Rs) 190

Buying Range (Rs)

CMP

Last Close Price (Rs) 203

% change Weekly (1.12)

Weekly Oscillator Direction

13 WMA Downwards

Support at 61.80% retracement

21 WMA Downwards

50 WMA Downwards

Bullish crossover in Stochastics Oscillator

RSI

MACD

Sideways Mode

Sideways Mode

Source: Falcon, BP Equities Research

Technical View

The stock had earlier reversed after taking support at lower trendline which is drawn parallel to the

upper trendline. The level of 185 also coincides with 61.80% retracement of its upmove from 97 to

345 which suggests this trough to act as a strong support for medium term trend. Recently price has

reversed after forming bullish engulfing a bullish reversal candlestick pattern near 78.60% retracement

which suggests the short term trend to turn bullish. Stochastic oscillator has given a bullish

crossover which is a bullish signal and compliments the bullish view of price. We recommend to BUY

PFC at CMP with a stop loss of 190 for the target of 235 in short term.

Investment Rationale

Centre's Ujwal Discom Assurance Yojana (UDAY) is a big positive for the revival of state electricity

boards (SEBs).

The success depends on timely tariff revision without political constraints, power purchase by SEBs

on competitive principles and consistency by SEBs in lowering aggregate technical and commercial

(AT&C) losses. Improving health of SEBs is positive for PFC as it has substantial exposure to it, although

there would be some pressure on margins when loans are converted to state bonds.

Attractive dividend yield

At current market price the stock is trading at attractive dividend yield of 4.5%. Given the case where

government is short of its disinvestment target for FY16, we can expect good dividends from PSU

companies and PFC being one of them.

Sector Outlook

Positive

Stock

BSE code 532810

NSE Symbol

PFC

Bloomberg

POWF IN

Reuters

PWFC.BO

Key Data

Nifty 7,963

52WeekH/L(Rs) 314 / 185

O/s Shares (Rs mn) 1320

Market Cap (Rs bn) 267

Face Value (Rs) 10

Average volume

3 months 21,38,450

6 months 20,55,000

1 year 20,70,000

Outlook

Demand to remain strong in power sector. PFC is one of the key players for the financing of power

projects. Owing to huge demandsupply gap in power sector the government is focusing on the development

of more power projects which in turn would boost the business of PFC. PFC is one of the

leading power sector public financial institutions and provides fund as well as non fund based finances

for entire gamut of power related activities. PFC is also nodal agency for ultra-mega power project

(UMPP) programme.

6

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