Shares of a Central Public Sector Undertaking under the Ministry of Power involved in financing projects in the complete power sector value chain from generation to distribution moved up by nearly 2 percent on BSE during Wednesday’s trading session.
Price Movement
With a market cap of Rs. 1.12 lakh crores, at 10:47 a.m., the shares of REC Limited were trading in the green at Rs. 428.25, up by around 1.6 percent, compared to its previous closing price of Rs. 421.4.
The stock hit its 52-week high at Rs. 653.9 on 12th July 2024, and compared to its current trading price, the stock is trading at a discount of over 34 percent. The stock has delivered negative returns of nearly 0.5 percent over a one-year period, while around 8 percent of positive returns in the last one month.
Future Outlook
The management remains optimistic about sustaining growth in both disbursements and asset quality. REC aims to expand its share of private sector lending to 30 percent by 2030, with a strong focus on renewable energy projects.
Disbursements under the Revamped Distribution Sector Scheme (RDSS) are expected to rise as projects progress. The company is confident in maintaining net interest margins (NIMs) above 3.65 percent to 3.7 percent in the coming years.
Loan Book Guidance
REC Limited aims to expand its loan book for nuclear power projects is expected to gradually increase to Rs. 50,000 crore by the end of 2030, according to Chairman and Managing Director Vivek Kumar Dewangan in an interview with NDTV.
Dewangan highlighted that over the next 22 years, about 1 lakh megawatts of power will come from nuclear power. With the current cost of nuclear power estimated at Rs. 13-14 crores per megawatt, the total investment required over this period is expected to be around Rs. 13-14 lakh crores.
However, he noted that the sector’s growth would take time to gain momentum. For FY25-26, REC plans to sanction loans amounting to Rs. 15,000 crore specifically for nuclear power projects.
Regarding the company’s assets under management (AUM), Dewangan mentioned that while the initial goal was to double the AUM to Rs. 10 lakh crore by 2030, the target could potentially be achieved earlier, by 2028-29.
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Market Position
REC commands the highest domestic ratings of AAA from major rating agencies and maintains an international rating on par with India’s sovereign rating. A key player in the Indian power sector, the company is also expanding into non-power infrastructure and logistics to strengthen its market presence.
Financial Performance
REC experienced a significant growth in its revenue from operations, showing a year-on-year increase of around 18.4 percent from Rs. 12,052 crores in Q3 FY24 to Rs. 14,272 crores in Q3 FY25. Similarly, its net profit increased during the same period from Rs. 3,308 crores to Rs. 4,076 crores, indicating a rise of nearly 23.2 percent YoY.
About the Company
Incorporated in 1969, REC Limited is a Government of India Enterprise engaged in extending financial assistance across the power sector value chain and is a Systemically Important (Non-Deposit Accepting or Holding) Non-Banking Finance Company (NBFC) registered with the RBI.
REC is a leading Infrastructure Finance Company in India and its principal products include interest-bearing loans to State Electricity Boards, State Power utilities/State Power Departments and the Private sector for all segments of Power Infrastructure.
Written by Shivani Singh
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