Power Finance Corporation Limited

“PFC operates a structurally protected near-duopoly in India's mandatory power infrastructure financing market, earning ~22% ROE on a self-compounding book growing at ~15% annually, yet trades at 1.21x book and 6.1x earnings — a valuation that embeds near-zero growth and a credit event simultaneously. The dominant risk (DISCOM guarantee cascade) is low-probability and has never materialised in Indian sovereign credit history; most other concerns are recurring uncertainties that reduce smoothness but not destination. At a 65-100% discount to Gordon Growth fair value, the margin of safety is genuine. PSU governance constraints and the absence of insider ownership cap this at a 'cheap good business' rather than a great one, warranting measured tranche-building rather than a full-conviction load.”