Power Finance Corporation stock pressured by Morgan Stanley downgrade

Published on 11/02/2026 at 00:58 | Editorial responsibility: Rafael Müller, Editor-in-Chief AD HOC NEWS

Power Finance Corporation stock faces a Morgan Stanley downgrade amid slower loan growth. The proposed REC merger remains central to the investment case.

What Morgan Stanley Changed

Morgan Stanley cut Power Finance Corporation's rating from Overweight to Equal-Weight.
The brokerage cited slower loan growth and reduced its earnings estimates for fiscal 2028 and fiscal 2029.
The proposed REC merger remains a key corporate development, with shareholders set to receive 88 PFC shares for every 100 REC shares under the reported swap ratio.

PFC, INE134E01011, Illustration mit AI erstellt.

In a report published on Sunday, November 1, 2026, The Economic Times said Morgan Stanley had downgraded Power Finance Corporation from Overweight to Equal-Weight and reduced its target price to 410 rupees from 510 rupees. The brokerage attributed the change to slower loan growth and reduced its core earnings estimates for fiscal 2028 and fiscal 2029.

Loan Growth Under Pressure

The brokerage said loan growth at Power Finance Corporation and REC had moderated sharply while bank and system credit to the power sector had accelerated. Morgan Stanley expects a gradual recovery, according to the report, which described the gap between the lenders' growth and broader sector credit as wider than previously expected.

The Economic Times also reported that Power Finance Corporation's revenue from operations slipped slightly to 28,527 crore rupees in the first quarter of fiscal 2027 from 28,539 crore rupees a year earlier. The company had declared an interim dividend of 3.90 rupees per share for the financial year.

REC Merger Remains A Catalyst

The proposed combination with REC remains an important structural issue for shareholders. The boards approved a share-swap ratio of 88 Power Finance Corporation shares for every 100 REC shares, according to The Economic Times. Power Finance Corporation owns 52.63 percent of REC, while the Indian government holds 55.99 percent of Power Finance Corporation.

Business And Competitive Position

Power Finance Corporation is a non-banking finance company providing financial products and advisory services to India's power, logistics and infrastructure sectors, according to Simply Wall St. Its activities include project funding, refinancing, working-capital facilities and financing for power generation, transmission, distribution and renewable projects. Simply Wall St lists REC, Indian Railway Finance Corporation and Housing and Urban Development Corporation as peers; Power Finance Corporation is the largest of those listed companies by the rounded market-cap figures shown on the page.