PFC, REC Share Price Today: Stocks Fall After Morgan Stanley Downgrade; Targets Cut Up to 20% Amid Merger

PFC and REC shares witnessed a notable decline during Thursday's trading session as investors reacted to a bearish reassessment from Morgan Stanley. The power-sector lenders extended their losses for the third straight trading session as investors reacted to Morgan Stanley's concerns.

The brokerage pointed to a growing disconnect between the companies' loan growth and the broader credit expansion taking place across India's power sector.

Morgan Stanley Downgrades PFC and REC, Cuts Target Prices

Morgan Stanley downgraded both PFC and REC to Equal-weight from Overweight, signalling a more cautious outlook for the two stocks. The brokerage cut its target price for PFC to Rs 410 from Rs 510, while the target for REC was reduced to Rs 360 from Rs 430.

The reduction represents a nearly 20% cut in PFC's target price and around a 16% reduction for REC. The brokerage's latest assessment suggests that the much-awaited recovery in loan growth could take longer than previously expected.

PFC Share Price Today

Power Finance Corporation shares were trading at Rs 365.35 on the NSE at 12:45 pm on August 20, down 2.43%. The stock opened at Rs 374.45 and touched an intraday high of Rs 375.10 before slipping to a low of Rs 365.05.

The biggest concern highlighted by Morgan Stanley is the widening gap between loan growth at PFC and REC and credit growth across India's power sector. While banks and the wider financial system have recorded stronger lending to the sector, the two specialised power financiers have witnessed a marked moderation in their loan growth.

Morgan Stanley said the growth disconnect has become much wider than expected, indicating that the recovery in lending momentum may be slower and more gradual. This has emerged as a key concern for investors because weaker loan growth can affect future income and earnings expansion.

For PFC and REC, sustained growth in their loan books remains important for maintaining healthy interest income and profitability. A prolonged slowdown could therefore create near-term pressure on their growth outlook, even if asset quality remains stable.

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