01 — At a Glance
The State-Owned Lender Every Portfolio Manager Secretly Owns
- 52-Week High / Low₹450 / ₹324
- 9M FY26 Revenue₹44,781 Cr
- 9M FY26 PAT₹12,920 Cr
- 9M EPS (₹)₹49.07
- Annualised EPS (9M×4/3)₹65.42
- Book Value₹327.60
- Price to Book1.07x
- Dividend Yield5.31%
- Debt / Equity5.78x
- Outstanding Loan Book₹5,81,787 Cr
Auditor’s Opening Note: REC closed 9M FY26 with ₹44,781 crore total income (+10% YoY), ₹12,920 crore PAT (+13% YoY), 21.5% ROE, and a 5.31% dividend yield. The loan book crossed ₹5.8 lakh crore for the first time. And somehow, the stock is down 16.5% in a year because the government decided to merge the lender with its sibling. Indian capital markets: where good earnings meet great confusion.
02 — Introduction
How to Make Money Lending to Everyone Else’s Problem Projects
REC Limited. Established 1969. Maharatna status since 2022. Finances every corner of India’s power sector: conventional generation, renewable energy, transmission, distribution, and now infrastructure & logistics. If it plugs in or distributes electricity, REC probably has a loan outstanding against it.
It’s not a bank. It’s an NBFC. More precisely, it’s a government-owned NBFC that lends at razor-thin margins, sits on a loan book worth ₹5.8 lakh crore, maintains AAA ratings from every agency that matters, and has delivered ₹12,920 crore profit in just nine months of FY26. The stock trades at 5.2x P/E and yields 5.3% in dividends. This is what a boring, profitable, government-backed machine looks like.
Then, on February 1, 2026, Finance Minister Nirmala Sitharaman announced during Union Budget: “REC and PFC will be restructured. In the form of a merger.” The stock fell 4% that day. Within weeks, both boards approved the in-principle plan. The deal structure is still being figured out. Timeline is “to be confirmed.” And investors, naturally, started selling like the company just admitted to cooking the books.
Welcome to the article on REC Ltd — a company that prints cash, maintains fortress balance sheets, and is about to become part of India’s largest power-sector financing entity. If you think consolidation is good, your portfolio is already up 5%. If you think it’s terrible, your portfolio already tanked. Let’s look at what the data actually says.
Merger Context: PFC and REC boards met on Feb 6, 2026 and approved in-principle merger. Both entities will continue operating separately until merger is consummated post regulatory approvals. The merged entity will be the largest power sector financing entity in India with combined AUM exceeding ₹16 lakh crore.
03 — Business Model: Lend to Power. Repeat. Die Rich.
How a CPSE Became a Cash-Printing Machine
EduInvesting runs entirely on reader support — ₹360 a year keeps the lights on.
