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 409
Expected Upside 10.5%
Forecast Horizon 2 Years
Historical CAGR 21.6%
1,000 Invested 12-Mar-2008
Today's Value 36,867
Investment Period 18 Years

Stock Snapshot

Post Results Return
+1.3%
Neutral Market Reaction
1-Year Target Price
380
2-Year Target Price
409
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
16.1

Price Performance

Basis of our Recommendation

REC Ltd is currently navigating a challenging environment characterized by muted loan growth and increased competitive intensity in the power financing sector. Management has indicated a cautious outlook, targeting a 9% loan growth for FY27/28, contingent on a revival in government capital expenditure and normalization of repayment rates. Despite a recent 5% QoQ growth in core net interest income, driven by a 15bps expansion in spreads, the overall loan book growth remains stagnant at 1%. Analysts note that while the renewable energy segment is expanding, the company faces execution risks due to a significant 43% YoY decline in disbursements. Vista's financial outlook reflects these challenges, with revenue expected to contract while profitability improves as margins expand. The current valuation appears fair, aligning with intrinsic value, but the expected upside remains limited at approximately 0.05%. Over the next 12-24 months, key opportunities include the potential for growth in the renewable energy sector and government infrastructure initiatives, while headwinds include competitive pricing pressures and execution risks in disbursement activities

👍 Why We Like This Stock

  • Management's strategic pivot towards renewable energy financing could drive future growth
  • A strong capital position supports stability amid current market challenges
  • Government infrastructure initiatives may provide a catalyst for loan growth recovery

Things To Watch Out For

  • Muted loan growth and a significant decline in disbursements pose execution risks
  • Increased competitive intensity is pressuring margins and profitability
  • The reliance on one-off credit cost reversals raises concerns about sustainable 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 22,407 24,911
Profit Before Tax (Cr.) 17,964 20,119 20,784 20,423 22,753
PBT Margin 102.2% 90.5% 8902.6% 91.1% 91.3%
Net Profit (Cr.) 14,633 16,019 17,027 16,828 18,748
Earnings Per Share 55.6 60.8 64.7 63.9 71.2

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.