PFC shares tumble 5% to 4-month low after weak Q1 earnings. Why Motilal Oswal still recommends Buy

Power Finance Corporation (PFC) shares dropped over 5% to a four-month low after the company reported its first-quarter results for FY27. The state-owned lender posted a modest 2% year-on-year rise in consolidated net profit to Rs 7,012 crore, which fell short of market expectations. The stock slide was driven by investor concerns regarding slower loan growth and pressure on profit margins during the quarter.

Despite the sharp fall in the share price, brokerage firm Motilal Oswal has maintained a 'Buy' rating on the stock. The firm cited the company's strong asset quality and its dominant position in the power sector as reasons to stay invested. However, the brokerage revised its target price downward to Rs 500, suggesting that investors should be cautious about the near-term valuation.

Investors should keep an eye on PFC's loan growth trajectory and net interest margins in the upcoming quarters. A recovery in these key metrics could support the stock, while continued weakness might weigh on the price. Monitoring the broader power sector trends will also be crucial for understanding the stock's future performance.