REC Limited

Financial Services — Credit Services · NSE

₹307.80−₹1.95 (−0.63%)

DalalBaazaar Score

82 / 100

🟢 Strong

Verdict

ATTRACTIVE

Risk

Low

Driven by falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

The 60-second version of REC Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

REC Limited, together with its subsidiaries, engages in the provision of financing services for power generation, transmission, distribution, infrastructure, and logistics projects in India.

IndustryCredit Services

SectorFinancial Services

Employees590

Annual revenue₹21,834 Cr

How does it make money?

Turns over ₹21,834 Cr a year. Of every ₹100 of sales, about ₹75 reaches shareholders as profit. Each of its 590 employees supports ₹37.01 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹37.01 Cr

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

10 analysts covering the stock expect revenue to grow about 9.5% and earnings to grow about 4.1% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+9.5%

Est. earnings growth+4.1%

Analysts10

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +50% while net margin moved -2% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+50%

Margin effect-2%

DalalBaazaar Score

82/ 100

Strong

Weighted across six categories. Every point is explained below.

• Revenue CAGR of 14.4% is steady
• Profit CAGR of 13.5%
✗ Profit fell 6.1% in the latest year

Quality vs. Valuation

Company Quality

82/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

87/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

5.1x

3Y Median

7.4x

40 monthly readings · mean 7.9x · range 4.8x–15.2x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 31% below its 3y median of 7.4x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 70% below the peer median of 17.0x.

vs. its own history

Cheap

7.4x median over 40 months · -31%

vs. sector peers

Cheap

17.0x median of 4 peers · -70%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

—

PEG

0.38

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 31% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 70% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

No clear risk case emerges from the available numbers — which is not the same as there being none.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 11% a year✓ 14.4% CAGR
Latest reported year was 25.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2Return on equity stays above 17%✓ 19.2%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Valuation vs its own median of 7.4x✓ 5.1x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 10 checks passed

✓ Strong return on equity (ROE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

7 good · 2 neutral · 2 weak

Market Cap

₹81,051 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

5.1x

Cheap

Cheap against the generic band

P/B Ratio

0.96x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹60.77

Profitable

Profitable on a per-share basis

ROE

19.2%

Strong

Strong capital efficiency

ROCE

Not meaningful

N/A for lenders

Banks and NBFCs don't report capital employed the way other businesses do

Debt/Equity

6.07x

High

High leverage

Revenue Growth (YoY)

25.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-6.1%

Falling

Profits are shrinking

Dividend Yield

4.42%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹5,902 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

4.6x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

96.9%

Good

Healthy core-business profitability

Net Margin

68.9%

Good

Strong bottom-line conversion

Beta (vs Nifty)

0.34

Defensive

Steadier than the market

52W Range Position

21%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

303.6 / 317.9

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

46.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹14,601 Cr	₹17,241 Cr	₹21,900 Cr	₹21,834 Cr	+14.4%
PAT (Net Profit)	₹11,167 Cr	₹14,145 Cr	₹15,884 Cr	₹16,308 Cr	+13.5%
EPS	₹42.28	₹53.59	₹60.2	₹61.81	+13.5%
ROE	19.2%	20.4%	20.3%	19.2%	—
Total Debt	₹3.81 L Cr	₹4.46 L Cr	₹4.96 L Cr	₹5.15 L Cr	+10.6%
Free Cash Flow	-₹37,377 Cr	-₹57,756 Cr	-₹39,147 Cr	₹5,902 Cr	—

🟢 Revenue has grown at 14.4% a year over 3 years.

🟢 PAT (Net Profit) has grown at 13.5% a year over 3 years.

🟢 EPS has grown at 13.5% a year over 3 years.

🟡 ROE has held roughly flat at 19.2% over 3 years.

🔴 Total Debt has grown at 10.6% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹37,377 Cr to ₹5,902 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹6.40 L Cr

Total Liabilities

₹5.55 L Cr

Cash & Equivalents

₹719 Cr

Operating Cash Flow

₹5,972 Cr

Capex

-₹70 Cr

Shareholding (proxy)

Institutional Holding

23.0%

Insider Holding

52.6%

Corporate Actions

Next Earnings

22 Oct 2026

Dividend Rate

₹13.6

Ex-Dividend Date

14 Aug 2026

Analyst Consensus

Recommendations

10 Buy · 3 Hold · 0 Sell

Target Price (Mean)

₹406.23

+32.0% vs CMP

Target Range

₹320 – ₹500

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

2 mixed1 negative3 general

RECLTD Outlook for the Week

Equitypandit, 09 Oct

REC (RECLTD) Share/Stock Price Live, NSE

TechGraph, 09 Oct

REC shares snap 2-day fall to rise over 2%; here's how you should trade

Moneycontrol.com, 30 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

PFC-REC merger: Which stock should you buy before the mega deal creates Rs 11 lakh cr power financing gian

The Economic Times, 02 JulM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

REC Ltd. Share Price update: fundamentals and sector view

Univest, 16 Sept

Double Jolt: PFC, REC Shares Plunge Up To 8% After CLSA Cuts Target Price On Mixed Q1 Results

NDTV Profit, 10 AugAnalyst view

🔴Potentially negativeAn analyst opinion changing, which moves the price without changing the business.

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Valuation · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last.

All 3 tripwires holding · see Key things to watch ↑