PSU Stock Tripled in 7M, Experts Bullish and Recommend Buying for 36% Returns

Nirmal Bang Securities recommends REC Ltd (NSE: RECLTD) as a Buy with a target price of Rs 675 per share, estimating potential returns of around 36% – 38% based on the current price of Rs 494.90 (as of February 2, 2024).

The brokerage highlighted the power sector’s estimated capacity addition of 212GW during FY 2020-27. According to the CARE report, this capacity addition may require a debt investment of more than Rs 10 lakh crore. Therefore this will create opportunities for financing RECs in transmission, distribution, and various infrastructure projects (roads, railways, and airports).

According to RBI, more than Rs 85 lakh crore will be required for green financing during FY23-30, which will be around Rs 10 lakh crore annually.

The company’s assets under management (AUM) stood at Rs 4.97 lakh crore in Q3FY24 and are expected to reach Rs 6 lakh crore by March 2025. They believe REC AUM could grow at 16 percent CAGR for FY24-28.

There could be a big change in provisioning in Q4FY24, which could lead to negative credit costs. During the last power upcycle 2009-11, REC consistently traded at a P/B multiple of 2-3x. Hence, REC is valued at 2.25x FY25 BVPS and this brings the target to Rs 675.

Stock up 200% in 7 Months and 300% within a year

The stock has increased by 63.18% in three months, 148.96% in the last six months, 262.79% in the nine months, and 309.83% within a year, which is a huge increase. In the last 12 months, it has increased investors’ money more than 4 times, that is, if you had invested ₹ 10,000 in it 12 months ago, today the value of those shares would have increased to ₹40,983.

243 Percent Growth in 2023

Investors who invested in it in 2023 earned quite well returns. The share price of REC Ltd in January 2023 was trading at ₹120.30 and on the last trading day of the year, it closed at ₹412.70 with a gain of 243.06 percent.

Last 10-Year Performance (Compounded)

In the table below you can check the company’s absolute returns and CAGR growth from listing. You can also check that if someone has invested a lump sum of Rs 10,000 then what is the value of those Rs 10,000 worth of shares today…

• There has been an increase of 310 percent in a year. If we look at the performance of the last two years, it has seen a rise of 370 percent.
• In the past five years, it has increased investors’ money by more than 5 times.
• For investors who invested Rs 10,000 in it ten years ago, the value of those ₹10,000 shares has grown to ₹74 thousand today.
• The CAGR growth of the stock for the last five years is 40.36 percent and 22.15 percent for ten years.

Last 10 Year Performance (Year-wise)

Disclaimer: This article is written for informational purposes only, do not consider it any investment advice.