RECLTD - Investment Analysis

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

Investment Rating: 4.4

📈 Long-Term Investment Analysis: REC Ltd (RECLTD)

REC Ltd is a strong candidate for long-term investment, especially for value and income-focused investors. Here's why

✅ Strengths

Low P/E of 6.24 vs Industry P/E of 24.6: Deeply undervalued.

High ROE (21.5%) and ROCE (9.96%): Indicates efficient capital deployment and strong profitability.

PEG Ratio of 0.38: Suggests undervaluation relative to growth.

Dividend Yield of 4.5%: Attractive for income investors.

Consistent PAT growth: ₹4,466 Cr vs ₹4,310 Cr previous quarter, with 29.1% YoY profit growth

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EPS of ₹64.1: Strong earnings base supports valuation.

⚠️ Risks

High Debt-to-Equity (6.33): Typical for NBFCs, but worth monitoring.

FII holding declined by 1.32%: Slight negative sentiment from foreign investors.

Trading below 200 DMA (₹435): Indicates bearish technical trend.

🎯 Ideal Entry Price Zone

Based on valuation and technical indicators

Fair Value Estimate: ₹475–₹525 (based on forward PE and EPS projections

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Ideal Entry Zone: ₹360–₹390

Near 52-week low of ₹357

Offers margin of safety and aligns with historical support levels

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🧭 Exit Strategy / Holding Period

If you already hold RECLTD

📌 Holding Period

Minimum 3–5 years to capture full value realization and dividend compounding.

Long-term targets suggest potential price of ₹1,267 by 2030

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🚪 Exit Strategy

Partial Exit: If price crosses ₹525 without improvement in ROCE or debt metrics.

Full Exit: If ROE drops below 15% or dividend payout declines significantly.

Reinvest Dividends: Use high yield to accumulate more if fundamentals remain strong.

🔍 Summary

Metric Value Verdict

P/E 6.24 Undervalued ✅

ROE 21.5% Strong ✅

ROCE 9.96% Moderate ⚠️

PEG Ratio 0.38 Attractive ✅

Dividend Yield 4.5% High ✅

Debt-to-Equity 6.33 High ⚠️

Entry Price Zone ₹360–₹390 Value Buy ✅

Exit Price Trigger ₹525+ Profit Booking Zone ⚠️

Would you like a dividend reinvestment strategy or comparison with other PSU financials like PFC or IRFC?

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