UBS has reiterated its Buy rating on REC Ltd, while trimming the target price to ₹550, implying an upside of around 36% from the current market price of ₹405.50.
The brokerage highlighted that the Q1FY26 profit after tax (PAT) was ahead of expectations, largely supported by write-backs and the resolution of one non-performing asset (NPA). This one-time recovery helped bolster the bottom line and reflects positively on the asset quality clean-up.
Key operational metrics remained strong, with Assets Under Management (AUM) rising 10.4% year-on-year and loan disbursements jumping 36.3% during the same period. UBS pointed out that the company’s return ratios are highly robust, with Return on Assets (RoA) at 2.9% and Return on Equity (RoE) at 23%, positioning REC among the top performers in the PSU financing space.
Despite the minor downward revision in target price, UBS continues to favour the stock on the back of improving asset quality, high capital efficiency, and steady growth momentum.
Disclaimer: The views expressed in this article are those of the brokerage firm (UBS) and do not constitute investment advice. Investors are advised to consult a certified financial advisor before making any investment decisions.
