Power Finance CorporationPFC. Technical and Fundamental Analysis

Technical:
10/07/2024: PFC Closed at its all time high levels above 560. The Daily price action has formed an inside candle on 09/07 and an outside candle on 10/07, but closing above the previous two days' highs. Which shows strength in the counter.

Possible scenarios:
SCENARIO 1:
Any Daily close above 567, and any bullish price action above and around 570 could mean an immediate breakout. Trade can be entered with a stop loss below today's low of 535.

SCENARIO 2:
The price action could go into a consolidation between the levels of 560-570 on the higher side and 520-530 on the lower side. One can accumulate in this zone and keep a stop loss below 500 for any daily close.

SCENARIO 3: A breakdown of 520 on daily time frame which will lead the price action to find support around levels of 500.


#This is only for educational purposes, of how to find value stocks and trade them.

Fundamentals:
Since the Stock is a NBFC lending to power sector, we will look at its P/B = 1.4. A very attractive valuation.
With a Return on Assets(loans) of 2.74%, its operating effeciency is better than most banks, and many other Public Sector NBFCs. The targets from a fundamental perspective, keeping the optimum P/B value to be 2, there is still, atleast 11% upside (without any growth in loan book).
But taking into account a Revenue and loan book growth of around 10-15% CAGR in the coming 2-3 years, on the back of increased power demand and lack of power generation...

One can safely assume an upside of more than
40%
depending upon the performance, increase/decrease in effeciencies and disbursements of loans.

Hence, an undervalued stock with good growth potential and good technical setup- breakout and daily close above previous all time high.

#This only for educational purposes of how to find undervalued growth stocks. and how to trade them.