CLSA has reiterated a High Conviction Outperform rating on REC Ltd, assigning a target price of ₹525, which implies a 29.5% upside from the current market price of ₹405.50.
The brokerage highlighted that Q1FY26 profit after tax (PAT) beat estimates by 4%, driven by the resolution of TRN Energy and provision reversals, which positively impacted earnings. However, CLSA flagged that loan growth at 10% YoY was below the company’s guidance, suggesting a need for improved disbursement momentum in the coming quarters.
Another concern was a loss on fair value, which weighed on other income. CLSA noted it is awaiting further management commentary to understand the nature and impact of this mark-to-market loss.
Despite these headwinds, CLSA maintains its positive stance given REC’s strong return ratios and continued traction in power sector lending.
Disclaimer: The views expressed in this article are those of the brokerage firm (CLSA) and do not constitute investment advice. Investors are advised to consult a certified financial advisor before making any investment decisions.
