⚠ 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: 4.0
| Stock Code | RECLTD | Market Cap | 94,692 Cr. | Current Price | 360 ₹ | High / Low | 452 ₹ |
| Stock P/E | 5.52 | Book Value | 314 ₹ | Dividend Yield | 5.00 % | ROCE | 9.92 % |
| ROE | 21.5 % | Face Value | 10.0 ₹ | DMA 50 | 363 ₹ | DMA 200 | 386 ₹ |
| Chg in FII Hold | -1.51 % | Chg in DII Hold | 0.35 % | PAT Qtr | 4,043 Cr. | PAT Prev Qtr | 4,426 Cr. |
| RSI | 46.8 | MACD | 1.61 | Volume | 2,13,86,177 | Avg Vol 1Wk | 1,40,47,961 |
| Low price | 331 ₹ | High price | 452 ₹ | PEG Ratio | 0.34 | Debt to equity | 6.24 |
| 52w Index | 23.9 % | Qtr Profit Var | 0.35 % | EPS | 65.2 ₹ | Industry PE | 19.1 |
📊 Core Financials
- Revenue & Profitability: Quarterly PAT at ₹4,043 Cr, slightly lower than previous ₹4,426 Cr, but EPS at ₹65.2 reflects strong earnings capacity.
- Margins: ROE at 21.5% is robust, while ROCE at 9.92% indicates moderate efficiency.
- Debt Ratios: Debt-to-equity at 6.24 is very high, typical for financing companies, but manageable given government backing.
- Cash Flows: Consistent profitability supports strong operating cash flows, though debt servicing remains a key risk.
💹 Valuation Indicators
- P/E Ratio: 5.52, significantly below industry average of 19.1, suggesting undervaluation.
- P/B Ratio: Current price ₹360 vs. book value ₹314 → ~1.15x, fairly reasonable.
- PEG Ratio: 0.34, very attractive, showing strong growth potential relative to valuation.
- Intrinsic Value: Appears undervalued compared to fundamentals, offering margin of safety.
🏢 Business Model & Competitive Advantage
- REC Ltd is a leading NBFC specializing in financing power sector projects.
- Competitive advantage lies in government support, sectoral expertise, and consistent profitability.
- Business model is stable but highly dependent on power sector growth and regulatory environment.
📈 Entry Zone & Long-Term Guidance
- Entry Zone: Attractive accumulation range between ₹340 – ₹355, near DMA200 and support levels.
- Long-Term Holding: Suitable for long-term investors seeking value and dividend income, though high leverage risk must be monitored.
✅ Positive
- Low P/E ratio compared to industry, indicating undervaluation.
- Strong ROE at 21.5% reflects good shareholder returns.
- High dividend yield of 5.00% provides steady income.
⚠️ Limitation
- High debt-to-equity ratio (6.24) increases financial risk.
- ROCE relatively modest at 9.92%, showing limited efficiency.
- Dependence on power sector makes earnings vulnerable to policy changes.
📉 Company Negative News
- Minor decline in quarterly PAT (₹4,426 Cr → ₹4,043 Cr).
- FII holding decreased (-1.51%), showing reduced foreign investor confidence.
📈 Company Positive News
- DII holding increased (+0.35%), reflecting domestic institutional support.
- Stable profitability with EPS at ₹65.2.
- PEG ratio of 0.34 highlights strong growth potential.
🏭 Industry
- NBFC sector trades at industry PE of 19.1, much higher than REC’s 5.52, highlighting undervaluation.
- Sector growth supported by infrastructure and power demand, though regulatory risks remain.
🔎 Conclusion
- REC Ltd offers strong earnings, high dividend yield, and undervaluation compared to peers.
- High leverage is a structural risk but manageable given government backing.
- Best suited for long-term investors seeking value and income, with entry around ₹340 – ₹355 offering a good margin of safety.
I can also prepare a comparative HTML snapshot of REC Ltd versus PFC to highlight relative strengths and risks in the power financing sector.