1. At a Glance
REC Ltd just delivered a spark-filled Q1 with ₹4,466 Cr PAT and ₹4.60 interim dividend. Its loan book is larger than your startup dreams, and its net profit margin is so fat, it should be on a keto diet. Oh, and P/E is still lounging at 6.31.
2. Introduction with Hook
Imagine if your neighborhood moneylender had access to ₹5 lakh crore and only lent to power companies. That’s REC. It’s like the sugar daddy of India’s power sector, minus the scandals.
- Q1 FY26 PAT: ₹4,466 Cr
- Dividend Yield: 3.95% (Basically FD returns, with drama)
In short, this is the PSU that pays like a private player and behaves like your local electricity board—slow, but reliable.
3. Business Model (WTF Do They Even Do?)
REC Ltd is a Power Finance Corporation twin—if twins wore different suits but shared the same job.
They fund:
- Generation: Coal, gas, solar, wind—if it lights a bulb, they finance it.
- Transmission: From plants to grids—also known as “invisible cables that carry your IPL match.”
- Distribution: Because someone has to fund DISCOMs losing money faster than startups burn VC cash.
Now expanding into Infra loans—metro, ports, steel infra. Basically, “Power” is just the first name on a very long resume.
4. Financials Overview
| Metric | Q1 FY26 | YoY Growth |
|---|---|---|
| Revenue | ₹14,737 Cr | +33% |
| Net Profit | ₹4,466 Cr | +51% |
| EPS | ₹16.96 | 🧨 |
| OPM | 99% | PSU Magic |
“Operating margins tighter than a Bollywood actor’s botox budget. 99%? Even Tupperware doesn’t seal this well.”
5. Valuation
Fair Value Range: ₹480 – ₹525
- P/E Method:
TTM PAT = ₹16,890 Cr
At 8x → ₹1,35,120 Cr → FV = ₹514/share
At 6x → ₹1,01,340 Cr → FV = ₹385/share - P/B Method:
BV = ₹298; Historical P/B range = 1.2–1.7x
Fair value = ₹357 – ₹506
“If you think 6x P/E is expensive, you probably haggle with your barber too.”
6. What’s Cooking – News, Triggers, Drama
- ₹4.60/share Interim Dividend for FY26 declared
- Infra lending push: Metro, ports, steel—basically, India’s next-gen power + infra financier
- Power sector reforms could drive loan book quality up
- ROE at 21.5%, no PSU slouching here
“Less drama than IRFC, more dividends than your cousin’s FD.”
7. Balance Sheet
| Item | Mar 2025 (₹ Cr) |
|---|---|
| Equity Capital | 2,633 |
| Reserves | 75,743 |
| Borrowings | 4,96,243 |
| Total Assets | 6,14,502 |
“Debt-heavy? Yes. But that’s the whole business model. They lend borrowed money like it’s Diwali bonus season.”
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net CF |
|---|---|---|---|---|
| FY23 | -₹37,360 Cr | -₹943 Cr | ₹38,123 Cr | -₹180 Cr |
| FY24 | -₹57,723 Cr | -₹1,831 Cr | ₹59,588 Cr | ₹34 Cr |
| FY25 | -₹39,064 Cr | -₹1,302 Cr | ₹40,034 Cr | -₹332 Cr |
“Cash from operations looks like a horror story—negative every year. But chill, they’re a financial institution, not a Kirana shop.”
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 21.5% |
| ROCE | 10% |
| P/E | 6.3x |
| Dividend Yield | 3.95% |
| Debt/Equity | ~6.5x |
“ROE this sweet with PSU safety? It’s like finding a clean public toilet in India—rare, but real.”
10. P&L Breakdown – Show Me the Money
| Year | Sales | PAT |
|---|---|---|
| FY23 | ₹39,486 Cr | ₹11,167 Cr |
| FY24 | ₹47,517 Cr | ₹14,145 Cr |
| FY25 | ₹56,367 Cr | ₹15,884 Cr |
“13% CAGR revenue growth and 17% profit CAGR over 3 years. Slower than startups, but stronger than 90% of the Nifty.”
11. Peer Comparison
| Company | Rev (₹ Cr) | PAT (₹ Cr) | P/E | ROE |
|---|---|---|---|---|
| REC Ltd | 58,044 | 16,890 | 6.3x | 21.5% |
| PFC | 1,06,501 | 22,990 | 6.0x | 21.0% |
| IRFC | 27,301 | 6,671 | 26.6x | 12.8% |
| HUDCO | 10,311 | 2,709 | 16.6x | 15.7% |
“REC is like that topper who doesn’t flaunt but always ends up with the prize money.”
12. Miscellaneous – Shareholding, Promoters
- Promoter (GoI): Steady at 52.63%
- FIIs: Trending down, now at 19.16%
- DIIs: Slowly creeping up—15.5%
- Retail Holders: Now over 11.2 lakh shareholders
“If this many people own it, either it’s a hidden gem… or just a PSU everyone forgot to sell.”
13. EduInvesting Verdict™
REC is the power lender that’s acting like a power player. Fat dividends, stable margins, clean NPAs (mostly), and growing relevance in infra—all while trading at 6x P/E.
It’s like LIC, if LIC actually gave you returns.
Metadata
Written by EduInvesting Team | 24 July 2025
Tags: REC Ltd, Power Finance, PSU Stocks, EduInvesting Premium, Q1 FY26 Analysis
