Stock Of The Day: REC Jumps On Strong Q4 Earnings — Key Levels, Analyst Views
Net profit was up 33% to Rs 4,079.1 crore in the quarter ended March.
Shares of REC Ltd. jumped as much as 9% on Thursday to an all-time high after the non-banking financial company posted a strong set of numbers in the fourth quarter of financial year 2024.
The company's stock was trading 8.25% higher at Rs 549 apiece on the NSE, compared to the 0.29% advance in the benchmark Nifty 50 at 10:53 a.m.
REC Q4 FY24 Earnings Highlights (Consolidated, YoY)
Revenue up 24% at Rs 12,677.2 crore vs Rs 10,243.1 crore
Net profit up 33% at Rs 4,079.1 crore vs Rs 3,065.4 crore
Net credit-impaired assets at 0.86% vs 1.01%
Provision coverage ratio on non-performing assets at 68.45%.
Key Levels To Watch
Resistance: Rs 550.7 (Life High)
Support: Rs 414.8 (One-Month Low)
FY25 Target Zero NPA Company
The state-run power finance company plans to become a zero non-performing-asset company in fiscal 2025.
"There are around seven projects where we have made 100% provisioning, while there are a few operating projects which are in the process of bidding, like KSK Mahanadi and Sinnar project in Maharashtra, that we expect will be resolved this year," VK Devangan, chairperson and managing director of REC, told NDTV Profit in an interview.
Renewables To Be 30% Of AUM By 2030
The company expects contribution from the renewable sector to grow phenomenally over this decade. "By 2030, we expect the renewable sector's assets under management to grow to 30% of the total loan book. Our current asset under management is around Rs 5,09,000 crore, that we expect to grow to Rs 10 lakh crore by 2030," Devangan said.
Street View
CLSA maintains a 'buy' rating on the stock and raised its target price from Rs 560 to Rs 595 apiece, indicating a 17% upside to the previous close.
While the public sector undertaking's valuation is relatively expensive when compared to its peers, the company's higher return on equity and capital-expenditure-led growth outlook is a key positive, according to a note. It expects thermal, renewable capex-led growth in fiscal 2025, unlike fiscal 2024, which saw a larger chunk of loan growth from discoms.
The brokerage does not expect writebacks for the company in fiscal 2025 due to more liquidation projects. It has also adjusted its loan-growth and credit-cost estimates, which leads to a 4% increase in CLSA's fiscal 2025 earnings-per-share estimates for the company.
