45% Dividend: Maharatna Powerpack NBFC REC Turned Ex-Dividend; To Raise Rs 1,60,000 Crore Soon; BUY More?

Maharatna PSU, REC Ltd a giant NBFC with key business to provide financial support to the Indian power sector, turned ex-dividend on March 28. REC is set to reward its investors with a dividend payout of a whopping 45% later in April month. Additionally, ahead of its ex-dividend day, REC also announced its fundraising plan of a whopping Rs 1.6 lakh crore. Following this, REC shares rallied to near its 52-week high levels.

REC Ltd Share Price:

REC share price rose to hit an intraday high of Rs 455.65 apiece, before ending at Rs 450.80 apiece up by 1.2% on BSE with a market cap of Rs 1,18,705.74 crore.

The NBFC player is closing its gap towards a 52-week high level of Rs 524 apiece. While currently, the stock trades higher by a whopping 298%.41% from its 52-week low of Rs 113.15 apiece. Accordingly, REC is a multi-bagger.

REC Dividend:

The CPSE turned ex-dividend on March 28 for its third interim dividend of Rs 4.50 per share having a face value of Rs 10 each. In percentage terms, the payout is about 45%. REC is planning to pay the third interim dividend by April 17, 2024.

For FY24, REC has already paid the first interim dividend of Rs 3.50 per share or 35%, followed by a second interim dividend of Rs 3 per share or 30% in the nine months of the fiscal.

In the financial year 2023-24, the PSU major paid dividends up to 126% amounting to Rs 12.6 per share.

On the current market price, REC's dividend yield is around 2.8%.

REC Fundraising:

In a board meeting held on March 27, REC's directors approved a total of Rs 1.6 lakh crore fundraising proposals.

Of the total, the company will raise about Rs 1.45 lakh crore from Domestic Bonds/ Debentures including but not limited to Infrastructure, Zero Coupon, Perpetual, Subordinate, InflationIndexed, Tax-Free, Principal Protected, Market Linked, Green Bonds, Environmental, Social, and Governance (ESG) Bonds, Partly Paid, Separately Transferable Redeemable Principal Parts (STRPP), Staggered Maturity, Cumulative Interest, Step Up Coupon, Bonds forming part of Bond ETFs, or any other Bonds/ Debentures, with/ without interest rate swaps/ options with/ without the same being embedded in the Bonds/ Debentures structure, as may be permitted by the Regulatory Authorities from time to time whether Unsecured/ Secured, Non-convertible, Redeemable, Taxable/ Tax-free whether on private or public placement basis.

Additionally, the fundraising can also be via Capital Gains Tax Exemption Bonds u/ s 54EC of Income Tax Act, 1961; and Rupee Term Loans from Banks/FIs/NBFCs/ Corporates/ Other Institutions. Lastly, fundraising could be from Foreign Currency Term Loans and External Commercial Borrowings (ECBs) including but not limited to / Foreign Currency Bonds/ Rupee Offshore Bonds (Masala or any other bonds)/ Green Bonds, Environmental, Social, and Governance (ESG) bonds etc.; Export Credit Assistance (ECAs); Official Development Assistance Loans (Long/ Medium/ Short Term); Foreign Currency Convertible Bonds (FCCBs); Foreign Currency Non-resid~nt (Bank) [FCNR (B») Loans; Export ODA loans from Banks/FIs/NBFCs/Other Institutions/ Multilateral Funding Agencies etc. (excluding rollovers).

Furthermore, REC will be raising Rs 5,000 crore from Short Term Loan (STL) from Banks/FIs/NBFCs etc. (excluding temporary loans i.e STL of tenure less than 6 months, WCDL, CC Limit, OD Facility or any other arrangement of similar nature).

Finally, the rest of Rs 10,000 is being planned to be raised via Commercial Papers. Notably, commercial paper raised and repaid during the financial year to be excluded from this limit.

Should You Buy REC Ltd share price?

Recently, CLSA recommended Buy REC Ltd for a target price of Rs 560 per share. The outlook is positive. Taking into consideration the target price, REC shares have the potential for over 24% from the current price level.

Moreover, as per the Trendlyne data, the consensus recommendation from 5 analysts for REC Ltd. is BUY. EPS is expected to grow by 24.5% in FY24. The 1-year average target price in REC is set at Rs 489, indicating a 9% potential upside from current levels.

Holding a Maharatna status, 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 or Greynium Information Technologies. The author, 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.