Why the fall in PFC stocks adversely affects govt?

If one takes a look at the ownership structure of Power Finance Corporation Limited (NSE:PFC) in India, most shares in the company have been owned by the state or government. In short, if there’s an increase in share price of PFC, the main benefit will go the government which holds a state of around 56 per cent in the company. Similarly, if there’s a slump in share prices, the one who suffers will also be the government. The market cap of the company declined to ₹342 billion, the institutions that have a stake of 33 per cent in PFC were the most hit. The government have also suffered losses. The institutional investors have a good stake in the stock of Power Finance. Though institutional investors have a reputation for making good investment decisions, they can also go wrong sometimes. PFC took a hit when several institutions changed their approach to the shares. The hedge funds don’t have much exposure in Power Finance. India has 56 per cent holding in the company. According to reliable data, insiders own under 1 per cent of the company. In other words, insiders own approximately ₹18 million worth of shares. Retail investors, or the public, have 11 per cent stake in the company.

Good results

Power Finance Corporation Thursday reported a 17 per cent rise in its consolidated net profit to Rs 5,023.42 crore in the September quarter, mainly on the back of higher revenues. The consolidated net profit of PFC was Rs 4,289.74 crore in the quarter ended September 30, 2020, a BSE filing said. The total income of the company rose to Rs 19,282.60 crore in the Sepetember quarter from Rs 18,171.41 crore a year ago. The consolidated net NPA declined from 2.60 per cent in H1 FY21 to 1.72 per cent in H1 FY22 due to the resolution of stressed assets.

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