Power financing companies are essential to India’s economy as they provide funding for projects in the power sector, such as generation, transmission, and distribution. Their financial support strengthens energy infrastructure, driving economic growth and advancing electrification efforts nationwide. Furthermore, their participation in government initiatives helps enhance the sector’s efficiency and supports the achievement of national electrification objectives.
Price Action
On Wednesday, the shares of Rural Electrification Corporation Ltd (RECL), which has a total market capitalization of Rs 1.15 Lakh Crores, were trading at Rs 437.55 per share, 0.4 percent lower than the previous closing price of Rs 442.75.
The shares are trading at a 33 percent discount from their 52-week high of Rs 654 apiece. The shares of RECL generated a return of 368 percent in the last three years and a 587 percent return in the last five years.
Financials
The company reported a Net Profit of Rs 11,477 Crore for 9MFY25, which was a 15 percent YoY growth as against Rs 10,003 Crore in 9MFY24. The total income of the company has grown by 18 percent YoY from Rs 34,571 Crore to Rs 40,805 Crore over the same period. Their Net Interest Income also increased 24 percent YoY from Rs 11,422 Crore to Rs 14,191 Crore. The company’s loan book grew by 14 percent YoY from Rs 4.97 Lakh Crore to Rs 5.66 Lakh Crore.
New Developments
REC Ltd initially focused on only power infrastructure but has recently expanded its portfolio to include Non-power Infrastructure and Logistics Sector including, the health sector, metro rail, steel infra, IT infra, Ports waterways, airports, Roads & Highways, etc, with the ministry allowing it to finance up to 33 percent of its loan book in these sectors.
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Brokerage Target & Rationale
On Monday, CLSA maintained its “high conviction outperform” rating on the stock of Rural Electrification Corporation Ltd (RECL). It gave a price target of Rs 525 per share on RECL, which implies a potential upside of 18 percent from current price of Rs 430
The Brokerage noted that the Ministry of Power has given additional charge of the RECL’s Chairman and Managing Director to Mr. Parminder Chopra. CLSA added that its outlook on the stock and expectations for REC’s financial performance remain unchanged and expects any risk arising due to changes in the management will be more operational and short-term.
About RECL
REC Ltd is an Indian public sector company that provides financial assistance for power projects. It offers loans for power generation, transmission, and distribution. Some of its services include setting up power generating stations, improving the power sub-transmission and distribution system, and financing various power generation, transmission, and distribution projects.
Written By Adhvaitha Nayani
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