DINESH

REC Ltd

Latest CMP 335
Today's Change ▼ -2.88%
52-Week High / Low 377 | 300
Price Date: 14-Aug-2026
Recommendation Buy
Target Price 403
Expected Upside 9.7%
Forecast Horizon 2 Years
Historical CAGR 21.6%
1,000 Invested 12-Mar-2008
Today's Value 36,881
Investment Period 18 Years

Stock Snapshot

Post Results Return
+1.3%
Neutral Market Reaction
1-Year Target Price
377
2-Year Target Price
403
52-Week High / Low
377 / 300
20-Day Return
-6.4%
Market Cap (Cr.)
88,212
Current PE
5.5
P/BV Ratio
1.0
Dividend Yield
5.3%
Industry PE
16.0

Price Performance

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

Balance Sheet Strength
Stable Financial Structure
Market Share
Stable
Industry Outlook
Weakening
Analyst View
Strong Buy
Dividend History
Consistent
FII Holdings
Stable

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
Consensus Recommendation ▲ Strong Buy
Consensus Target 430
Coverage 4 Analysts
Analysts' Viewpoint
REC Ltd's renewable energy segment shows robust growth, contributing to portfolio diversification amid a challenging environment marked by a 43% YoY decline in disbursements and stagnant loan book growth. Analysts highlight the company's strong capital adequacy and stable NIM outlook as positives. However, competitive pressures and exchange rate volatility pose risks. Future growth is expected from government capex revival and increased disbursement volumes, supporting a targeted 9% AUM CAGR through FY28.

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.