Adobe Stock
REC lit up the charts today, climbing nearly 4 per cent to Rs 398. The reason? A much-needed push from the Reserve Bank of India.
The RBI just finalised new rules for project loans, bringing down provisioning requirements from 5 per cent to just 1-1.25 per cent. That’s a direct win for project lenders like REC and PFC. Less money locked away means more available to lend, and investors wasted no time cheering the move.
Why it matters
- More capital to play with: The lower provisioning means REC can unlock more funds to grow its loan book.
- Better profitability ahead: With less capital held back, key ratios like return on equity (ROE) should get a bump.
- Clarity = confidence: Aligning norms for banks and NBFCs ends the confusion and levels the playing field.
The result? REC was among the most active stocks of the day, with volumes hitting Rs 270 crore on the NSE alone.
About the company
REC Ltd (earlier known as Rural Electrification Corporation) is a government-owned lender that funds power, renewable energy, and infrastructure projects. It’s a Maharatna PSU under the Ministry of Power and lends to both public and private sector players.
Below is a table summarising the company’s fundamentals.
| Metric | Value |
|---|---|
| Market cap | Rs 1.03 lakh crore |
| P/E | 6.5 |
| P/B | 1.3 |
| ROE | 22.4 per cent |
| ROCE | 10 per cent |
| Book value | Rs 297.6 |
| EPS | Rs 60.3 |
| Dividend yield | 4.5 per cent |
Value Research Online ratings
- Overall: 4/5
- Quality: 10/10
- Growth: 7/10
- Valuation: 6/10
- Momentum: 1/10
The takeaway
If you like value stocks with solid cash flows and room to grow, REC fits the bill. It’s still trading cheap and now has a policy tailwind. Just keep an eye on how effectively it puts that freed-up capital to use. Execution is everything.
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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.
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