REC Ltd
Stock Snapshot
Price Performance
Vista Outlook
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
View Technicals Analysis →| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 17,569 | 22,238 | 23,346 | 22,383 | 23,630 |
| Profit Before Tax (Cr.) | 17,964 | 20,119 | 20,784 | 20,635 | 21,812 |
| PBT Margin | 102.2% | 90.5% | 89.0% | 92.2% | 92.3% |
| Net Profit (Cr.) | 14,633 | 16,019 | 17,027 | 17,002 | 17,972 |
| Earnings Per Share | 55.6 | 60.8 | 64.7 | 64.6 | 68.3 |
Analyst Recommendations
| Broker | Recommendation | Target Price | Date |
|---|---|---|---|
| Morgan Stanley | ► Equalweight | 360 | 23-Aug-2026 |
| CLSA | ▲ Outperform | 420 | 20-Aug-2026 |
| ICICI Securities | ► Add | 400 | 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, distribution, infrastructure, and logistics 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 letter of undertaking in lieu of bank guarantee, etc. It is also involved in the implementation of distribution system strengthening works, implementation of grid/off-grid solar (PV) projects, and installation of smart meters. 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. It serves government entities, independent power producers, and private sector borrowers. The company 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.