Power Finance Corporation (PFC) and REC Limited have received in-principle board approval for a strategic merger. This follows a high-profile proposal in the Union Budget 2026-27 to restructure public sector NBFCs. The consolidation is designed to create a massive financing entity capable of driving India’s ambitious energy transition and infrastructure goals. The merged entity will maintain its status as a Government Company. This structural shift aims to optimize credit flow and improve operational efficiency across the power sector. Currently, the two companies manage a combined loan book exceeding 11.50 trillion. Financial highlights for the quarter ending December 2025 demonstrate robust growth. PFC reported a consolidated net profit of 8,212 crore, a 6% increase year-on-year. On a standalone basis, PFC’s profit rose 15% to 4,763 crore. Asset quality has seen a marked improvement, with PFC’s gross non-performing assets (NPA) dropping to 1.64% from 1.94% in the previous year. Lending activity remains focused on the future. PFC’s renewable energy portfolio has reached 81,031 crore, supporting approximately 60 gigawatts of green capacity. REC has similarly expanded its renewable book to nearly 58,000 crore. These figures align with India's goal of reaching 500 gigawatts of non-fossil fuel capacity by 2030. Shareholder returns have remained a key highlight. PFC recently declared a third interim dividend of 4 per share for the 2025-26 fiscal year. This brings the total dividend payout for the year to 11.35 per share. The stock has delivered staggering returns of 264% over the last three years, firmly placing it in the multibagger category. As of February 9, 2026, PFC shares are trading near 419 with a market capitalization of approximately 1.39 trillion. REC maintains a market cap of around 98,000 crore with a share price of 372. The market continues to watch for the detailed merger scheme, which will outline the final swap ratios and administrative integration. This restructuring marks a pivotal step in the "Viksit Bharat" vision. By scaling up, the new entity will have an increased risk appetite and greater capacity to fund mega-scale projects in energy storage, green hydrogen, and grid integration.