REC Ltd
Stock Snapshot
Price Performance
Vista Outlook
View Technicals Analysis →Basis of our Recommendation
REC Limited is strategically positioning itself as a key financier in India's energy transition, focusing on expanding its green loan portfolio and optimizing funding through international capital markets. Management's emphasis on government-led reforms and a stable pipeline of business supports Vista's forecast of improving margins despite a projected contraction in revenue. The company's cautious outlook on loan growth, driven by competitive pressures and muted disbursements, aligns with Vista's expectation of a 9% CAGR in assets under management through FY28, contingent on a recovery in government capex. While the infrastructure finance sector is expanding, REC faces challenges from competitive pricing and potential regulatory changes that could impact profitability. Over the next 12-24 months, opportunities lie in the growing demand for renewable energy financing and government infrastructure investments, while headwinds include the cyclical nature of the industry and economic uncertainties. Overall, REC's strong capital position and strategic focus on sustainable financing provide a resilient outlook, supporting Vista's investment recommendation with an expected upside of approximately 13.57%
Why We Like This Stock
- Strategic pivot towards green financing aligns with national energy transition goals, enhancing long-term growth prospects
- Management's focus on maintaining asset quality and optimizing funding costs supports margin improvement
- Strong government backing and a stable project pipeline provide a reliable foundation for future business
Things To Watch Out For
- Muted loan growth and competitive pressures may hinder revenue expansion and profitability
- Economic uncertainties and potential regulatory changes pose risks to the financing landscape
- The cyclical nature of the infrastructure finance sector could lead to volatility in performance
Key Parameters
Financial Snapshot
| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 17,569 | 22,238 | 23,346 | 22,385 | 24,675 |
| Profit Before Tax (Cr.) | 17,964 | 20,119 | 20,784 | 20,335 | 22,489 |
| PBT Margin | 102.2% | 90.5% | 8902.6% | 90.8% | 91.1% |
| Net Profit (Cr.) | 14,633 | 16,019 | 17,027 | 16,755 | 18,530 |
| Earnings Per Share | 55.6 | 60.8 | 64.7 | 63.6 | 70.4 |
Analyst Recommendations
| Broker | Recommendation | Target Price | Date |
|---|---|---|---|
| CLSA | ▲ Outperform | 420 | 20-Aug-2026 |
| ICICI Securities | ► Add | 400 | 27-Jul-2026 |
| Morgan Stanley | ▲ Overweight | 430 | 27-Jul-2026 |
| Motilal Oswal | ▲ Buy | 435 | 27-Jul-2026 |
Company Overview
Show Company Profile
REC Limited, together with its subsidiaries, engages in the provision of financing services for power generation, transmission, and distribution projects in India. The company primarily offers long, medium, and short-terms loans; debt refinancing, equity financing, financing of equipment manufacturing for power sector and coal mines; policy for funding against regulatory assets, and revolving bill payment facility services; and provides letter of undertaking in lieu of bank guarantee, etc. It also acts as a nodal agency for the implementation of Pradhan Mantri Sahaj Bijli Har Ghar Yojana, Pradhan Mantri Surya Ghar Muft Bujli Yojana, Deen Dayal Upadhyaya Gram Jyoti Yojana, and National Electricity Fund. In addition, the company acts as the bid process coordinator for selection of transmission service provider through tariff based competitive bidding process for independent inter-state and intra-state transmission projects; provides project implementation and consultancy services in power sector; and operates National Feeder Monitoring System, a cloud-based IT and analytical platform, designed to monitor the reliability and quality of power. It serves central/state government power utilities, as well as private sector power utilities. REC Limited was formerly known as Rural Electrification Corporation Limited and changed its name to REC Limited in October 2018. The company was incorporated in 1969 and is based in Gurugram, India. REC Limited is a subsidiary of Power Finance Corporation Limited.