REC, PFC shares rise after CLSA maintains ‘buy’ ratings; targets suggest at least 20% upside

Power finance companies REC and PFC’s shares surged on Wednesday after CLSA maintained its ‘buy’ ratings on both PSU stocks. PFC and REC shares jumped as much as 3.5 per cent each three to Rs 481 and Rs 432.3 apiece on BSE, respectively.

The foreign brokerage shared mixed views on both PSU stocks, which have already rewarded investors with multifold returns in the past year.According to CLSA, the two PSU firms will benefit on the asset quality front with a sequential improvement of at least 60-70 bps in their gross non-performing assets (NPAs) and write-backs in the March quarter owing to the resolution of Lanco Amarkantak

On Tuesday, Adani Power said it had received creditors’ approval for a resolution plan to acquire insolvent Lanco Amarkantak Power.The brokerage anticipates some margin pressure in REC on account of its bond yield profile.PFC, on the other hand, should benefit on this front, said CLSA, pegging a rise of 5-13 basis points in its net interest margin over the calendar years 2025 and 2026.

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