Shares of REC Limited jumped 2% in morning trade after global brokerage Morgan Stanley initiated coverage on the stock with an ‘Overweight’ rating and a price target of ₹485. As of 9:28 AM, the shares were trading 2.26% higher at Rs 400.40.
The firm sees REC as a solid low-risk, high-yield pick—especially as India steps up its infrastructure and clean energy drive. According to the note, both REC and its peer PFC are expected to clock around 12% loan growth (CAGR) between FY25 and FY28. This growth is likely to be driven by strong lending across renewable and thermal energy projects, as well as investments in power distribution and transmission infrastructure.
Morgan Stanley expects both companies to maintain a strong return on equity in the range of 17–19%, thanks to healthy net interest margins, stable asset quality, and minimal loan slippages.
Valuation-wise, the brokerage thinks the stocks are attractively priced. They currently trade at just 5–6 times their projected FY27 earnings, making them appealing options for investors looking for stable, quasi-sovereign financial plays with good dividend yields. In fact, both REC and PFC are offering dividend yields between 3.8% and 4.5%, with improving balance sheets and better asset-liability management.
This upbeat call comes at a time when investor focus is shifting toward infrastructure enablers. Both REC and PFC are seen as key players in financing India’s growing power needs—especially in the green energy and DISCOM reform space. With government backing and deep sector knowledge, the two offer rare consistency and visibility in today’s choppy markets, Morgan Stanley says.
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