⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
RECLTD - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.6
| Stock Code | RECLTD | Market Cap | 91,756 Cr. | Current Price | 348 ₹ | High / Low | 450 ₹ |
| Stock P/E | 5.35 | Book Value | 314 ₹ | Dividend Yield | 5.17 % | ROCE | 9.92 % |
| ROE | 21.5 % | Face Value | 10.0 ₹ | DMA 50 | 351 ₹ | DMA 200 | 376 ₹ |
| Chg in FII Hold | -1.51 % | Chg in DII Hold | 0.35 % | PAT Qtr | 4,043 Cr. | PAT Prev Qtr | 4,426 Cr. |
| RSI | 51.4 | MACD | -5.52 | Volume | 1,08,46,851 | Avg Vol 1Wk | 1,10,86,626 |
| Low price | 321 ₹ | High price | 450 ₹ | PEG Ratio | 0.33 | Debt to equity | 6.24 |
| 52w Index | 21.1 % | Qtr Profit Var | 0.35 % | EPS | 65.2 ₹ | Industry PE | 18.0 |
📊 Core Financials
- Revenue Growth: Quarterly PAT declined slightly from ₹4,426 Cr to ₹4,043 Cr (-0.35%), showing stable but flat growth.
- Profit Margins: Margins remain steady, supported by lending operations.
- Debt Ratios: Debt-to-equity at 6.24 → high leverage, typical for PSU NBFCs.
- Cash Flows: Strong and predictable due to long-term financing contracts.
- Return Metrics: ROE at 21.5% is strong; ROCE at 9.92% moderate due to leverage.
💹 Valuation Indicators
- P/E Ratio: 5.35 vs Industry PE of 18.0 → undervalued.
- P/B Ratio: ~1.11 (Price ₹348 / Book Value ₹314) → reasonable.
- PEG Ratio: 0.33 → attractive, suggesting growth at a discount.
- Intrinsic Value: Current price below fair value, offering upside potential.
🏢 Business Model & Competitive Advantage
- REC Ltd is a PSU NBFC financing power sector projects and infrastructure.
- Competitive advantage lies in government backing, scale, and sector dominance.
- Strong dividend yield (5.17%) adds investor appeal.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive between ₹330 – ₹345 (near DMA200 support).
- Long-Term Holding: Suitable for long-term investors seeking stable dividends and exposure to India’s power sector growth.
✅ Positive
- Low P/E compared to industry.
- Strong ROE (21.5%).
- High dividend yield (5.17%).
- Government-backed operations ensure reliability.
⚠️ Limitation
- High leverage (Debt-to-equity 6.24).
- ROCE relatively modest at 9.92%.
- Flat quarterly profit growth (-0.35%).
📉 Company Negative News
- Decline in FII holdings (-1.51%).
- High leverage raises risk in volatile interest rate environments.
📈 Company Positive News
- Stable profitability despite sector challenges.
- DII holdings increased (+0.35%).
- Strong dividend payout policy.
🏭 Industry
- Power sector financing remains crucial for India’s infrastructure growth.
- Industry PE at 18.0, highlighting REC’s undervaluation.
🔎 Conclusion
REC Ltd offers strong fundamentals with attractive valuations and high dividend yield. While leverage is high, government backing and consistent profitability make it a reliable long-term investment. Investors can accumulate near support levels for steady returns and exposure to India’s power sector expansion.