Shares of REC and PFC surge in trade today after global brokerage firm UBS initiated coverage on the stocks with a Buy rating. As of 9:30 AM, REC share price was up 2.14% at Rs 631.80 on the NSE, shares of PFC was up 1.7% at Rs 548 on the NSE.
According to UBS, PFC and REC are no longer viewed as traditional power capex financiers, but as pivotal players in funding India’s renewable energy boom and related infrastructure expansion. Currently, nearly 20% of their combined loan book is allocated to renewables and infrastructure, a figure UBS expects to double to approximately 40% by FY29, in line with India’s plan to double its renewable energy capacity over the next five years.
UBS highlights the access to long-term funds at reasonable rates, supported by implicit government guarantees, as a significant competitive advantage for both PFC and REC. The financial institutions have also been in an EPS upgrade cycle, averaging over 15% growth annually over the past three years. UBS expects this momentum to continue, with robust Return on Equity (ROE) projected to remain between 18-20%.
Given these factors, UBS has set price targets of ₹670 for PFC and ₹720 for REC, implying 1.6x and 2x FY26E Price-to-Book Value (P/BV) ratios, respectively.
