Widely read:
Adobe Stock
After a sharp 60 per cent rally over the past six months, REC 's stock finally took a breather, slipping 2.9 per cent on May 14 to Rs 390. That's down from its recent high of Rs 412, enough to make short-term traders a little jittery.
What REC does
REC (earlier known as Rural Electrification Corporation) is one of the government's key financial arms for power sector projects — transmission, generation, rural electrification — you name it. Over the years, it has moved beyond power, lending to metro, highways, ports and even logistics projects. Essentially, it's the money behind India's infrastructure buildout.
Below are the company's fundamentals:
| Metric | Value |
|---|---|
| Market cap | Rs 1,06,738 cr |
| P/E ratio | 6.72 |
| P/B ratio | 1.36 |
| Industry P/E | 31.15 |
| Debt to equity | 0 |
| Return on equity (ROE) | 22.39 per cent |
| Return on capital employed (ROCE) | 10.05 per cent |
| Dividend yield | 4.45 per cent |
| Book value | Rs 297.64 |
| Earnings per share (EPS) | Rs 60.32 |
Why the stock cooled off
After a blistering rally, REC's stock finally took a pause — and for good reason.
While there was no earnings shock (Q4 FY25 results were actually quite solid), the company trimmed its AUM growth guidance for FY26 to 11-13 per cent, down from its earlier range of 15-17 per cent. That's a subtle but important signal. Investors don't like lower expectations, even when the business is still growing.
This caution from management likely spooked the market a bit, leading to the 2-3 per cent dip. But let's not forget: the company is still clocking double-digit growth and reporting strong margins and rising disbursements.
Here's what's still working in REC's favour:
-
Net profit for Q4 rose 5 per cent YoY to Rs 4,236 crore
-
Net interest income grew 38 per cent to Rs 5,877 crore
-
Net interest margin improved to 3.63 per cent
- Bad loans reduced sharply (net credit-impaired assets down to 0.38 per cent)
To top it off, REC also declared a Rs 2.60 final dividend, taking the FY25 payout to Rs 18 per share.
Value Research Online ratings
-
Quality score: 10/10
-
Growth score: 7/10
-
Valuation score: 6/10
- Momentum score: 2/10
Should you buy the dip?
A trimmed growth outlook might've caused REC's stock to cool off, but there's no real crack in the story. The fundamentals are strong, profitability is rising, and asset quality is improving quarter after quarter.
Government-backed infra lenders like REC tend to ride long-term policy trends, and India's infra push isn't slowing anytime soon. The dividend yield of over 4 per cent is an added bonus for income-seeking investors.
Sure, PSU stocks can be volatile, and expectations are now slightly more measured. But when a stock with a 10/10 quality rating (per Value Research) and 356 per cent 3-year return gives you a breather, it might just be time to pay attention.
For detailed financial information, visit REC's stock page .
Why smart investors trust expert research
Want sharper, stock-focused guidance beyond gold? Value Research Stock Advisor gives you expert-researched stock recommendations, long-term strategies and the discipline to help you build real wealth. Join thousands of successful Indian investors who trust us to guide their equity journey.
Check it out here: Value Research Stock Advisor
Disclaimer: This is not a stock recommendation. This story was created with the assistance of artificial intelligence and is intended for informational purposes only. Please take it with a pinch of salt and do your own research or consult a financial advisor before making investment decisions.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
