Morgan Stanley has maintained an Overweight rating on REC Ltd, with a target price of ₹485, implying an upside of 19.6% from the current market price of ₹405.50.
The brokerage noted that REC’s Q1FY26 PAT rose 29% YoY and 5% sequentially, beating its estimates by 11%. The earnings beat was largely led by provision reversals and better-than-expected net interest income (NII).
Net interest margin (NIM) for the quarter stood at 3.9%, ahead of expectations, although it showed a sequential decline due to interest write-backs. Meanwhile, disbursements surged 36% YoY, primarily driven by strong growth in the distribution segment.
Morgan Stanley believes the fundamentals remain strong, and the company is well-placed to benefit from continued momentum in the power sector’s credit demand.
Disclaimer: The views expressed in this article are those of the brokerage firm (Morgan Stanley) and do not constitute investment advice. Investors are advised to consult a certified financial advisor before making any investment decisions.
