PFC, REC, IREDA, Shares Of Other Project Financing Companies Surge Up To 5 Per Cent

Shares of project financing companies, such as IREDA (Indian Renewable Energy Development Agency), PFC (Power Finance Corporation of India), REC, HUDCO and IRFC gained up to 6 per cent in early trade on June 20, 2025. The stocks gained after the Reserve Bank of India (RBI) released new Project Finance Directions for 2025. The new guidelines seek to streamline the central bank’s policy for project financing, making it concise, while also easing certain requirements for project financing companies.

On June 20, PFC share price surged by 5.66 per cent to trade at a high of Rs 412.45 apiece on the NSE in early trade. Shares of REC gained 4.48 per cent to trade at an early high of Rs 400.85 apiece, while those of IREDA climbed 3.47 per cent to Rs 164.26. On the other hand, shares of IRFC gained 2.56 per cent to trade at Rs 135.75 and HUDCO shares climbed 2.35 per cent to trade at Rs 222.78 apiece on the NSE.

The RBI said in a release dated June 19 that the new directions for project financing companies seek to harmonise the framework for financing of projects in both infrastructure and non-infrastructure sectors. Notably, the directions will come into effect from October 1, 2025.

“These directions are issued to provide a harmonised framework for financing of projects in infrastructure and non-infrastructure (including commercial real estate and commercial real estate-residential housing) sectors by regulated entities. These directions also lay down the revised regulatory treatment upon change in the DCCO of such projects in the backdrop of a review of the extant instructions and analysis of the risks inherent in such financing,” RBI said in the release.

According to the release, the central bank has decreased the standard asset provisioning requirement for under-construction infrastructure projects from 5 per cent to 1 per cent. On the other hand, commercial real estate projects will require a provision of 1.25 per cent.

The stocks gained as the new guidelines are expected to ease the mandatory requirements for under-construction loans for project financing companies. After the new norms come into effect it is expected that project-focused non-banking financial companies (NBFCs) will have to set aside relatively less capital for any probable future losses on under-construction loans. This, in turn, can free up funds for lending more loans.

Ajit Mishra – SVP, Research, Religare Broking Ltd told Outlook Money that the Reserve Bank of India can potentially result in less regulatory uncertainty and lower operational disruptions.

"The new RBI guidelines simplify and standardize the treatment of project loans across sectors, while also relaxing previous provisions. This results in minimal impact on profitability and balance sheets, as the changes apply only to new and upcoming project loans. Existing loan books remain unaffected, reducing regulatory uncertainty and operational disruption for project financing companies," Mishra said.

Mishra added that project financing stocks are likely to remain resilient even amid broader market declines on account of heightened investor confidence and stability from the new guidelines.

"Project financing stocks are expected to remain resilient. The sector could continue to outperform, even if the broader market faces declines, due to increased confidence and stability from the new guidelines," Mishra said.

At the time of writing this story, PFC shares were trading at Rs 410.75 apiece, up by 5.23 per cent, while those of HUDCO were trading at Rs 224.25 apiece, up by 3.03 per cent.

Shares of REC were trading at Rs 395.50 apiece, up by 3.09 per cent, while shares of IRFC and IREDA were trading higher by 1.72 per cent and 3.64 per cent on the NSE respectively.