Emkay Global Financial’ research report on REC
REC reported a soft quarter, with moderating growth and disbursement led by higher repayments (including prepayments) and NPA resolutions, while margin and asset quality were stable. The higher standard assets provisioning offset the gains resulting from the KSK Mahanadi resolution. Ahead, while the management is confident of a stable NIM and RoA profile, the near-term loan growth outlook at ~12% is lower than the earlier guidance of ~15%. To account for the Q4 performance and management commentary, we revise down our growth estimates which leads to a 7-9% cut in AUM and a 4-7% cut in EPS for FY26-27E.
Outlook
We maintain BUY on the stock, while cutting (by ~13%) Mar-26E target price to Rs525, implying FY27E P/B of 1.3x. Our TP and multiple cut is largely driven by growth moderation, while we continue to see value in the stock which is currently trading at ~1x FY27E P/B, delivering ~18% RoE and ~5% dividend yield.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
REC – 16052025 – emkay
