Brokerage firm CLSA has projected a nearly 35% upside on the stock post its fourth quarter earnings.
CLSA said it has maintained its “high conviction outperform” rating on REC Ltd. with a price target of ₹525 per share. The stock ended the previous session at ₹389.9 apiece.
The brokerage said it is awaiting the growth outlook from REC’s new management.
It said REC ended the financial year 2025 with only 11% growth in assets under management (AUM) from the previous year. This was primarily dragged by elevated repayments — 26% of opening loans compared to 20% in FY24 — while disbursals were up 18% from the last year, CLSA said.
The brokerage said REC’s asset quality trend has been “very healthy with no slippages in the past three years”. The elevated credit cost in FY25 was primarily due to a higher standard asset provision, offsetting write-backs from resolved projects, it added.
CLSA said the REC’s spread / margin expansion was also healthy, supported by over 100% recovery in KSK Mahanadi, leading to interest recognition. The cumulative undisbursed sanctions for FY23-25 at 54%, lend confidence on the growth outlook, CLSA said.
However, given the near-term challenges, CLSA expects REC’s Assets Under Management (AUM) to grow at 12% in financial year 2026 and 16% in financial year 2027
REC Ltd reported a 5.5% increase in its consolidated net profit in the fourth quarter to ₹4,236 crore from ₹4,016 crore in the previous year. Its Net Interest Income (NII) witnessed a 37.6% increase to ₹5,877 crore from ₹4,272.5 crore in the year-ago period.
The board also recommended a final dividend of ₹2.6 per share (face value of ₹10), in addition to the ₹15.4 per share paid in four tranches during FY25. This takes the total dividend for the fiscal to ₹18 per share.
All 12 analysts that have coverage on REC Ltd have a “buy” rating on the stock.
Shares of REC are trading 1.5% lower on Friday at ₹386.6. The stock is down 41% from its 52-week high level of ₹654.
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