REC Share Price Target
On Tuesday, January 30th, profit booking occurred at higher levels for REC Limited, a government-backed entity in the power finance sector. The stock experienced a correction of more than 1.5 percent. Despite this short-term adjustment, the stock has demonstrated robust returns of around 300 percent in the past year, making it an appealing investment option. Nirmal Bang reiterates the significance of debt investment for expanding capacity in the power sector, emphasizing the potential benefits for the companies involved. Their bullish stance on REC remains, with a clear recommendation to buy.
Key Takeaways:
- Nirmal Bang advocates for debt investment in the power sector for capacity expansion.
- REC Limited, a government company in power finance, experienced profit booking with a correction of over 1.5 percent on Tuesday.
- Despite the recent correction, REC Limited has delivered impressive returns of approximately 300 percent in the last year, enhancing its attractiveness as an investment.
- Nirmal Bang maintains a positive outlook on REC and advises investors to consider purchasing its stock.
REC Share Target: Price will touch ₹675
Nirmal Bang Securities has advised investors to buy REC Limited, setting a target price of Rs 675 per share. As of January 30, 2024, the stock is currently priced at Rs 493. With this valuation, there is a potential for a robust return of approximately 37-38 percent at the current market price. Over the past year, REC Limited has proven to be a lucrative investment, providing substantial returns of about 300 percent. Moreover, the stock has displayed strong performance in the last six months, yielding a return of around 150 percent.
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REC: What is the brokerage’s opinion
The brokerage predicts a substantial increase in the power sector’s capacity, projecting an addition of 212GW during the fiscal years 2022-2027. As of November 2023, the power capacity is expected to reach 426 GW. CARE suggests a debt investment of Rs 10.9 lakh crore will be necessary for this capacity expansion, creating financing opportunities for REC.
These opportunities extend to areas such as transmission, distribution, and broader infrastructure like roads, railways, and airports. According to RBI, green financing needs for the fiscal years 2023-2030 are estimated at Rs 85.6 lakh crore, averaging Rs 10.7 lakh crore annually.
Nirmal Bang Securities reports that REC’s Assets Under Management (AUM) stood at Rs 4.97 lakh crore in Q3FY24. They anticipate the AUM to reach Rs 6 lakh crore by March 2025, implying a potential 16 percent Compound Annual Growth Rate (CAGR) from FY24 to FY28. The company has undergone a thorough financial cleanup from FY13 to FY23, evident in the reduction of Net Non-Performing Assets (NPA) from 5.8 percent in FY 2018 to a commendable 0.8 percent.
Looking forward, there might be a significant change in provisioning in Q4FY24, potentially resulting in a negative credit cost. Drawing parallels with the 2009-2011 power upcycle, REC consistently traded at a Price-to-Book (P/B) multiple of 2-3x. Hence, the valuation of REC is calculated at 2.25x FY25 Book Value Per Share (BVPS), establishing a target of Rs 675.
Conclusion
This article serves as a comprehensive guide to the This Power PSU Stock buy immediately; Has given 300% return in 1 year. The information and forecasts are derived from our analysis, research, company fundamentals, historical data, experiences, and various technical analyses. The article delves into the share’s prospects and growth potential in detail. Feel free to comment below if you have any further queries. We are more than happy to address all your questions. If you find this information helpful, consider sharing the article with as many people as possible.
Disclaimer:
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