RECLTD - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.4

📊 Core Financials Analysis

Profitability

ROE: 21.5% and ROCE: 9.92% — strong return metrics, especially ROE, reflecting efficient capital deployment.

EPS: ₹63.5 — robust earnings per share, supported by consistent quarterly PAT growth (₹4,451 Cr vs ₹4,236 Cr).

Quarterly Profit Variation: +29.3% — solid YoY growth, indicating operational momentum.

Balance Sheet & Cash Flow

Debt-to-equity: 6.39 — high, but expected for NBFCs engaged in infrastructure lending.

Dividend Yield: 4.68% — attractive for income-focused investors.

Strong and stable cash flows backed by long-term government-backed lending.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 6.05 Deeply undervalued vs industry PE of 25.3

P/B Ratio ~1.30 Reasonable given strong ROE

PEG Ratio 0.37 Undervalued relative to growth potential

Intrinsic Value ₹420–₹460 (est.) Current price ~10–20% below fair value

🧠 Business Model & Competitive Edge

Company Profile: REC Ltd (Rural Electrification Corporation) is a leading public sector NBFC focused on financing power sector projects, including generation, transmission, and distribution.

Strengths

Strategic role in India’s energy infrastructure and rural electrification.

Government ownership ensures policy alignment and credit stability.

Recurring income from long-tenure loans and sovereign-backed clients.

Challenges

High leverage and sector concentration.

Sensitive to interest rate cycles and regulatory changes.

📈 Technical & Sentiment Overview

RSI: 58.7 — neutral to mildly bullish.

MACD: -0.37 — flat momentum, possible consolidation.

DMA 50 & 200: Price near both — trend indecisive.

Volume: Above average — strong investor interest.

FII/DII Holding: Mixed — FII reduction, DII increase.

💡 Entry Zone & Long-Term Guidance

Suggested Entry Range: ₹360–₹380 — near support and below intrinsic value.

Holding Strategy

Ideal for long-term investors seeking high dividend yield and undervalued financials.

Price targets for FY25 range from ₹410 to ₹460

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; long-term targets for FY30 range from ₹950 to ₹1,000

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Monitor disbursement growth, asset quality, and policy tailwinds.

REC Ltd is a classic value play with strong fundamentals, high yield, and a strategic role in India’s infrastructure growth. If you're building a portfolio of high-yield, low-volatility assets, this one deserves a solid allocation. You can explore more on Trendlyne’s REC dashboard or review long-term projections on Street Investment’s forecast.

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www.streetinvestment.in

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