2 Bonuses, 45% Dividend, 3.45% Yield: Powerpack Maharatna PSU NBFC Is Technical Pick Of PL; Buy For Rs 485 TP

REC Ltd, a leading NBFC providing financial services to the Indian power sector, is a technical pick of brokerage Prabhudas Lilladher. On April 12, REC Ltd is seen shedding over 1% on BSE tracking bearish market, however, this creates a buy-on-dips opportunity. Prabhudas Lilladher has recommended BUY for a target of Rs 485 in the short term.

At the time of writing, REC Ltd's share price traded at Rs 443.20 apiece, down by 1.2% on BSE with a market cap of Rs 1,16,704.49 crore, near its intraday low of Rs 442 apiece.

The stock's 52-week high and low is at Rs 524 apiece and Rs 120 apiece respectively. Since the past 1-month, REC shares have corrected to over 8% on BSE.

But in six months, the stock's upside is 53%, while in a year, the stock has rallied by 260% emerging as a multi-bagger.

On a technical note, Vaishali Parekh, Vice President - Technical Research at Prabhudas Lilladher said, "RECL 455 making a lower top formation on the daily chart with a descending channel pattern visible for the medium term time frame with the 100 period MA lying near 435 levels as the next support zone."

Parekh further added, "A decisive break below 435 levels, the stock can slide further till 400 levels of the lower band of the channel with bias turning weak."

Finally, Parekh said, "Our view will be negated once a decisive breach above 485 level is confirmed and bias would turn positive."

REC has continued its growth trajectory and posted yet another financial year with strong operational performance with highest ever-loan sanctions at Rs 3.588 lakh crore and the highest ever loan disbursements at Rs 1.615 lakh crore during the year 2023-24, as per the regulatory filing.

Further, in FY24, REC's disbursement was Rs 1,61,462 crore, up by 66.72% from Rs 96,846 crore in FY23. Of the total sanctions of Rs 3,58,816 crore in FY24, the company sanctioned Rs 1,36,516 crore to renewable energy business, which was up by 538.79% from Rs 21,371 crore in FY23. Meanwhile, the total sanctions were up 33.66% from Rs 2,68,461 crore sanctioned in FY23.

The NBFC's loan book reported a growth of 17.13% to Rs 5,09,545 crore in FY24 as compared to Rs 4,35,012 crore in FY23.

Last month, REC turned ex-dividend for 3rd interim dividend of Rs 4.50 per share having a face value of Rs 10 apiece. REC is planning to pay the third interim dividend by April 17, 2024. Earlier, REC paid a first interim dividend of Rs 3.50 (35%) and a second interim dividend of Rs 3 per share (30%) during the nine months of FY24.

In FY23, the company paid dividends up to 126% amounting to Rs 12.6 per share.

Currently, REC has a dividend yield of 3.45% on the latest market price.

Apart from dividends, REC has also delivered bonus shares on two occasions in 2016 and 2022. The company has not carried any stock splits as of now.

In the case of a bonus issue, the first bonus issue was of a ratio of 1:1 in September 2016, followed by another 1:3 bonus share in August 2022.

REC is a 'Maharatna' company under the administrative control of the Ministry of Power, Government of India, and is registered with RBI as a Non-Banking Finance Company (NBFC), Public Financial Institution (PFI) and Infrastructure Financing Company (IFC).

Over time, REC has evolved and expanded its financing mandate to cover the entire Power-Infrastructure sector comprising Generation, Transmission, Distribution, Renewable Energy and new technologies like Electric Vehicles, Battery Storage, Green Hydrogen etc. More recently REC has also diversified into the Non-Power Infrastructure sector comprising Roads & Expressways, Metro Rail, Airports, IT Communication, Social and Commercial Infrastructure (Educational Institutions, Hospitals), Ports and Electro-Mechanical (E&M) works in respect of various other sectors like Steel, Refinery, etc.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.