Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) shares fell 2.5% and 3.9% respectively after announcing their merger plan. The boards approved restructuring to enhance efficiency and scale, with PFC already holding a majority stake in REC. Analysts expect long-term benefits despite near-term investor caution.
Shares of Power Finance Corporation (PWFC.NS) and Rural Electrification Corporation (RECM.NS) slipped in early trade following the announcement of their proposed merger. PFC fell 2.5%, while REC dropped 3.9%, reflecting investor caution despite the government’s push for consolidation in public sector NBFCs.
Key Highlights:
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Merger Plan: Boards of PFC and REC approved an in-principle merger, aligning with the Union Budget 2026–27 vision for NBFC restructuring.
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Ownership Structure: PFC already owns 52.6% stake in REC; post-merger, government holding in PFC will reduce to 42%.
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Strategic Goal: The merged entity will remain a government company, aiming to improve efficiency and scale in financing India’s power and infrastructure sectors.
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Market Reaction: Short-term declines in share prices reflect investor uncertainty over integration and valuation.
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Analyst View: Bernstein notes PFC shareholders may benefit more from the merger due to favorable swap ratios and stronger balance sheet positioning.
While near-term volatility persists, the merger is expected to create a larger, more efficient lender capable of driving India’s energy transition and infrastructure financing.
Sources: CNBC-TV18, The Economic Times, Mint