PFC, REC may be valued upwards

Both have managed to hold up their NIMs at 4.8-4.9% so far in FY17, and could again reach 6% in FY18

Even as many frontline stocks of non-banking financial companies (NBFCs) struggled to maintain their yearly gains in 2016, Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) managed to defy the trend, closing the year with 36 and 24 per cent gains, respectively. This comes after both underperforming the Sensex in 2015 and both touching a two-year low in February 2016, after many questioned their road ahead. What really stands out is their outperformance relative to Sensex in 2016, which was backed by financials, especially from June quarter onwards. 

Three factors favour investment in PFC and REC. First, as both