RECLTD - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

⚡ Fundamental Stock Analysis: REC Ltd (RECLTD) Rating: 4.1

💼 Financial Foundation

Profitability

ROE: 21.5% — highly efficient use of equity capital, top-tier for NBFCs.

ROCE: 9.96% — reasonable given cost-heavy asset structure.

EPS: ₹64.1 — strong earnings visibility, translating to generous valuation buffer.

Quarterly Performance

PAT: ₹4,466 Cr, up from ₹4,310 Cr — healthy growth (+29.1%), showing consistent income generation.

Debt & Balance Sheet

Debt-to-Equity: 6.33 — expected for a lending institution; manageable due to sovereign backing.

Dividend Yield: 4.50% — excellent for passive income investors.

🔍 Valuation Snapshot

Metric Value Commentary

P/E Ratio 6.24 Deeply undervalued vs industry average (24.6)

P/B Ratio ~1.34 Near book — offers margin of safety

PEG Ratio 0.38 Suggests undervaluation relative to growth potential

RSI / MACD RSI 50.7, MACD –0.47 Neutral — trend may stabilize or rise ahead

DMA Status Price ₹400 vs DMA50 ₹402 / DMA200 ₹435 Trading below long-term average — potential reversion candidate

52W Index Position: 14.6% — far off highs, indicating value re-entry zone.

Volume dip compared to avg — signals consolidation or cooling after recent moves.

🧠 Business Model & Competitive Positioning

Segment Focus: One of India’s leading NBFCs focused on power sector financing.

Strategic Strengths

Backed by the Government of India — minimizes default risk, supports rating.

Fixed-income-like stability due to long-tenure infra loans.

Key role in financing renewables, grid expansion, and distribution improvements.

Risks

High concentration in power sector could limit diversification.

Declining FII interest (–1.32%) may reflect global yield pressures or policy uncertainty.

📈 Investment Strategy

Suggested Entry Zone: ₹390–₹400 — near short-term support and undervaluation markers.

Holding Guidance

Ideal for conservative portfolios needing stable cash flows and high dividend payout.

Long-term outlook supported by infrastructure growth and energy transition tailwinds.

Monitor borrowing costs, government disbursal trends, and DII momentum (+0.72% inflow).

If you'd like, I can help build a dividend income tracker with stocks like REC, Power Finance Corp, and NTPC — or even craft a thematic playbook around infra-backed NBFCs. Let me know what sparks your interest.

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