REC shares hit life-time high after PSU delivers record Q2 performance, declares dividend; CLSA sees 20% upside in stock

REC share price NSE: State-run infrastructure finance company REC’s shares soared to an all-time high on Thursday, November 2, after the company reported its highest ever quarterly net profit. The stock of REC rose by as much as Rs 21.15 or 7.5 per cent to Rs 304 apiece on NSE, surpassing an earlier peak of Rs 299.2 touched last month.  

At 11 am, the stock held on to much of its intraday gains with a rise of 7.4 per cent for the day at Rs 303.7 apiece on the bourse, continuing to move higher for a second straight day. After market hours on Wednesday, after the PSU posted a record standalone net profit of Rs 3,773 crore for the second quarter of the current financial year, up around 38 per cent compared on a year-on-year basis.

Its disbursements more than doubled to Rs 41,598 crore for the quarter under review from Rs 17,827 crore a year ago, according to an official statement.  

REC Q2 results: Here are some of the other key highlights of REC’s Q2 earnings

• Sanctions up 23 per cent at Rs 1,04,366 crore; renewable sector contribution at 24 per cent 
• Interest income on loan assets up 18 per cent at Rs 11,213 crore  
• Total comprehensive income up 119 per cent at Rs 4,188 crore  
• Interim dividend of Rs 3.5 per share 

REC dividend 2023, REC dividend record date 

The REC board declared its second interim dividend for the financial year. It fixed November 13 as record date for the dividend of Rs 3.5 per equity share, a 35 per cent payout given the face value of Rs 10 per share. 

REC dividend payment date 2023: When will the REC dividend be paid? 

The board fixed November 30 as the date for the payment of the interim dividend. Read more on REC dividend  

REC share price target 2023: What analysts say  

CLSA maintained its ‘buy’ rating on REC after the state-run company’s earnings announcement and raised its target price for the stock by Rs 80 to Rs 340. The brokerage’s target implies an upside of more than 20 per cent in REC shares from the previous close. 

REC’s loan growth remains strong due to the jump in disbursals and its management has reiterated its loan book guidance, CLSA highlighted, raising its loan growth estimate for the company from 15 per cent to 19 per cent.  

CLSA also pointed out improvement in REC’s asset quality, and said growth for the company will be supported by the expansion in infrastructure and renewable segments. The brokerage estimates REC’s return on equity (RoE) at 19-20 per cent in three years. 

What does REC do? 

Established in 1969, REC Limited is a Maharatna CPSE, under the Ministry of Power, provides long-term loans and other finance products for the power-infrastructure sector comprising of generation, transmission, distribution, renewable energy and new technologies like electric vehicles (EVs), battery storage and green hydrogen.  

REC has diversified into the core infrastructure sector, including roads, metro, airports, IT and ports. Its loan book stood at Rs 4.54 lakh crore at the end of the fiscal first quarter. 

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