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Today's prices ask more of Power Grid than of Power Finance Corporation.
At current prices, buyers of Power Finance Corporation are assuming about 9.4% return on equity against 25.5% in its own record; for Power Grid it is 14.6% against 17.0%. That shows which share needs more to go right — not which is cheaper. How far each trades from its estimated fair value is in the full valuations.
- Valuation method: Power Finance Corporation on estimate withheld; Power Grid on excess return.
- Size: Power Grid is worth about 2.2 times Power Finance Corporation on the stock market.
- Record: Power Finance Corporation has grown revenue faster: Power Finance Corporation compounded at about 11% a year (FY2020–FY2026) and Power Grid at about 6% (FY2018–FY2026).
- What to watch: loan growth at Power Finance Corporation; capex on new lines at Power Grid.
| Power Finance Corporation | Power Grid | |
|---|---|---|
| Price | ₹334 | ₹257 |
| Market cap | ₹1.10L Cr | ₹2.39L Cr |
| P/E | 4.2 | 14.8 |
| P/B | 0.83 | 2.38 |
| Fair value 🔒 sign in | ₹0,000 | ₹0,000 |
| Upside 🔒 sign in | +00% | +00% |
| Valued on | Estimate withheld | Excess return |
01Two businesses
The bank of India's power sector
Power Finance Corporation (PFC) is a state-owned non-bank lender, majority-owned by the Government of India, that finances generation, transmission and distribution projects. Its borrowers are mostly state-owned utilities and large power companies.
The national grid, as a business
Power Grid Corporation of India, majority-owned by the Government of India, owns and operates most of the country's inter-state electricity transmission network — the high-voltage lines and substations that move power from where it is made to where it is used.
02The records side by side
Power Finance Corporation has grown revenue faster: Power Finance Corporation compounded at about 11% a year (FY2020–FY2026) and Power Grid at about 6% (FY2018–FY2026). By revenue, Power Finance Corporation is about 2.5 times the size of Power Grid. Power Finance Corporation kept 29.1% of revenue as net profit in FY2026; Power Grid kept 34.1% of revenue as net profit in FY2026.
Full ten-year tables and charts are on each company's page: Power Finance Corporation · Power Grid.
03What each price assumes
Work backwards from each share price and you can see what buyers are taking for granted — the rate each company must sustain to justify what it costs, against what its own record supports.
04What decides each one's value
- Loan growthInvestment in power and renewables drives demand for loans.
- SpreadsLow funding costs from its state backing support margins.
- Capex on new linesBringing renewable power from deserts and coasts to cities needs a huge transmission build-out, which grows Power Grid's earning base.
- Allowed returnsThe regulated return on equity is the core of its profit.
05What could go wrong
- ConcentrationHeavy exposure to one sector and to state utilities.
- State discom financesWeak distributors can delay repayment.
- Regulatory resetsA lower allowed return in a future tariff period would reduce value.
- ExecutionLand acquisition and right-of-way problems can delay projects.
06Which is better value?
Sign in free to see which trades further below its worth
- ✓Both fair values per share — each on the method that fits the business
- ✓Every step of both workings — growth, margins and cost of capital, with sources
- ✓Bull, base and bear cases — for each company
- ✓Downloadable reports — the full write-up for each, yours to keep
08Questions people ask
Is Power Finance Corporation or Power Grid better value?
That turns on how far each share trades from its estimated fair value. Both figures, with every step of the working, are in the full valuations, free to view once you sign in. On the public numbers, Power Finance Corporation trades at 4.2 times earnings and 0.83 times book value, and Power Grid at 14.8 times earnings and 2.38 times book value — but multiples alone mislead when two businesses work differently, which is why each is valued on the method that fits it.
What is the difference between Power Finance Corporation and Power Grid?
Power Finance Corporation (PFC) is a state-owned non-bank lender, majority-owned by the Government of India, that finances generation, transmission and distribution projects. Power Grid Corporation of India, majority-owned by the Government of India, owns and operates most of the country's inter-state electricity transmission network — the high-voltage lines and substations that move power from where it is made to where it is used.
Are Power Finance Corporation and Power Grid valued the same way?
No. Power Finance Corporation is valued on estimate withheld and Power Grid on excess return, because forcing one model onto both would misstate at least one of them.
What does today's price assume for Power Finance Corporation and Power Grid?
Worked backwards from the share price, Power Finance Corporation needs about 9.4% return on equity and Power Grid about 14.6% return on equity, against 25.5% and 17.0% in their own records.