300% return in one year: Brokerage suggests buying this PSU power stock, revises target

Power PSU stock to buy: State-run Maharatna company REC's shares skyrocketed on Thursday (May 2), after the company clocked a 33 per cent jump in consolidated net profit to Rs 4,079.1 crore for the March quarter driven by higher income. The stock scaled an all-time high of Rs 558 before finishing with a gain of nine per cent at Rs 554.2 apiece on BSE. 

REC share: Price target

After REC's strong quarterly performance, brokerage CLSA maintained its 'buy' rating on the stock with a revised target of Rs 595 instead of Rs 560 earlier. The target implies an upside of more than seven per cent from Thursday's closing price.

The brokerage suggests long-term investors wait for a correction in the stock, which has already run up more than 22 per cent in a week.

Why brokerage CLSA is bullish on the stock

CLSA said that the growth outlook of REC Ltd is strong. The company has performed very well in FY24. Improvement in ratings has helped in credit costs. AUM i.e. loan growth for the next 3-4 years is expected to increase at an average rate (CAGR) of 18 per cent. The margin is stable on a quarterly basis. The company also has a mega capex plan for FY25.

The REC chairman said that the company's net interest margin is expected to be maintained at 3.5 per cent in FY25. The total net profit of the company in FY24 was Rs 14,019 crore with improving asset quality.

The company is aiming to become NPA-free by the end of FY25. Bad assets worth Rs 13800 crore are expected to be rectified soon. There is also a plan to raise loans worth Rs 1.6 lakh crore in FY25.

What market wizard Anil Singhvi says 

Zee Business Managing Editor Anil Singhvi suggests follow-up buying of the stock after the company's strong Q4 results.

He suggests buying the futures with a strict stop loss at Rs 500 for targets of Rs 520 and Rs 530.

A summary of REC Q4FY24 earnings

The company's total income for the fiscal fourth quarter rose to Rs 12,706.66 crore from Rs 10,254.63 crore a year ago.

Total expenses were Rs 7,477.18 crore in the March quarter as against Rs 6,353.40 crore.

For the entire FY24, the company's net profit was Rs 14,145.46 crore, up from Rs 11,166.98 crore in FY23. Read more here 

REC share price history

Power finance company REC's is a multi-bagger PSU stock. This stock made an all-time high of Rs 558 in intraday. The company's shares jumped 22 per cent in the last one week, 29 per cent in two weeks, about 20 per cent in one month, 11 per cent in three months, 30 per cent so far this year, 82 per cent in six months, 305 per cent in one year and 480 per cent in two years. 

(The views/suggestions/advices expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult their investment advisers before making any financial decision.)

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