REC Share Price Analysis: All You Need to Know

REC Ltd. (Rural Electrification Corporation) is playing a critical role in securing India’s energy requirement. Started as a nodal agency to develop power infrastructure in rural areas in 1969, it has now transformed itself into a key infrastructure financing company in India, with “Maharatna” status. 

The growth is also reflected in the REC share price. On April 30, 2020, the REC share price was around ₹71.66. Five years later, on 30th April 2025, it was at ₹420, an increase of about 500%. 

In this article, we will analyze the REC share price growth, the company’s potential, and the challenges it may face ahead. Let’s dive in. 

Brief Overview of REC Ltd.

REC Ltd. is a central public sector undertaking company that finances projects in the power sector’s entire value chain, from generation to transmission to distribution.

Started in 1969 to develop power infrastructure in rural areas, the RBI granted NBFC status in 1998 and IFC (Infrastructure Financing Company) in 2010. With an IFC status, the company must deploy at least 75% of its assets in infrastructure financing projects. 

REC was granted Navratna status in 2008. And, due to its exceptional financial performance, the government conferred “Maharatna”, the highest status for PSUs in 2022.

At the end of December 2024, REC has a total loan outstanding of ₹5.65 lakh crore. Looking at the loan portfolio, close to 90% of the borrowers are state-backed companies. 

REC Ltd. Management Team

Shri Jitendra Srivastava is the Chairman and Managing Director of REC Ltd. and is a seasoned civil servant. He is an IAS Officer from Bihar Cadre (2000 Batch). Over the years, he has held key administrative roles and responsibilities across the Government of Bihar and the Government of India.  

Shri Vijay Kumar Singh has been the Director (Projects) of REC Ltd. since July 2022. He holds a B.Tech degree in Electrical Engineering from IIT Roorkee and has over 35 years of experience in the power sector. Before joining REC in 2007, he was with Power Grid Corporation and NTPC. 

Shri Harsh Baweja has been the Director (Finance) and CFO of REC Ltd. since May 2024. A Chartered Accountant by profession, he has experience of over 33 years, handling various roles and managing financial portfolios. 

REC Ltd. Shareholding Pattern

Power Finance Corporation, another systematically important infrastructure finance company, acquired the government stake of 52.7% in REC Ltd. in 2019. LIC of India also holds a 1.35% stake in REC, and the Government of Singapore holds a 1.84% stake. 

Financial Performance

Net Interest Income

REC’s consolidated net interest income reached ₹46,410 crores during FY24, which is around 19.5% higher compared to the previous financial year from ₹38,836 crores. 

In the April to December period (9MFY25), the REC’s NII reached ₹40,158 crores, which is around 18% higher than ₹34,041 crores recorded during the period in 9MFY24. 

Net Profit

REC’s profitability metric is improving. In FY24, net profits of the company increased by 27% to ₹14,109 crores from ₹11,055 crores in FY23. 

For the 9MFY25, the REC’s net profit increased by 15% to ₹11,574 crores from ₹10,066 crores recorded in 9MFY24. 

Key Financial Metrics

Net Interest Margin (NIM)

Net Interest Margin is like the operating margin for banks and NBFCs. In FY24, the NIM of REC Ltd. was 3.57%, improved by 19 basis points year-on-year. At the end of December 2024 (9MFY25), it rose to 3.64%. 

Period	FY23	FY24	9MFY24	9MFY25
NIM (%)	3.38	3.57	3.52	3.64

Cost of Funds

REC Ltd. borrows funds from the market and then loans them to enterprises. Having a lower cost of funds is important for higher profitability and stability of the company. 

The cost of funds for the company is steady and has increased slightly from 7.13% at the end of March 2024 to 7.15% at the end of December 2024. 

Period	FY23	FY24	9MFY24	9MFY25
Cost of Funds(%)	7.28	7.13	7.16	7.15

Asset Quality

REC Ltd.’s client concentration is government-backed entities, which lowers the risk of default or non-payment of dues. 

The company’s asset quality has improved significantly over the last two years, with Net Credit-Impaired Assets reducing from 3.28% in June 2023 to 1.95% at the end of December 2024. 

Period	Jun 23	Sep 23	Dec 23	Mar 24	Jun 24	Sep 24	Dec 24
Net Credit-Impaired Assets (%)	3.28	3.14	2.78	2.71	2.61	2.53	1.95

Provision Coverage Ratio (PCR)

PCR measures how well the bank or NBFC is positioned to absorb the losses from bad loans.  It is calculated by dividing the provisions set aside for bad loans by total gross NPAs.

REC Ltd.’s PCR has reduced from 70% in Jun 2023 to 62% at the end of Dec 2024. This may be due to the lower risk of default by enterprises. 

Period	Jun 23	Sep 23	Dec 23	Mar 24	Jun 24	Sep 24	Dec 24
PCR (%)	70.46	69.37	70.41	68.45	68.48	65.12	61.88

Capital Adequacy Ratio (CAR)

The Capital Adequacy Ratio shows how well the bank or financial institution can absorb losses if any good loan suddenly becomes bad or in times of financial distress. 

REC Ltd. has a CAR of 25.33% at the end of December 2024, which is higher than the regulatory requirement. 

REC Share Price Analysis

REC Ltd. was listed on the stock market in 2008, and its IPO was oversubscribed 27 times. 

Despite the strong IPO subscription, the REC share price growth failed to match investors’ expectations. Since its listing in 2008, the REC share price traded range-bound between ₹60 and ₹160 levels until 2023. 

REC share price made an all-time high of ₹654 on 1st July 2024. 

REC Ltd. classifies itself as a high-dividend-paying company. Over the years, it has increased its dividend payments to shareholders. In the last five years, it has doubled its dividend payouts from 82% (₹8.2 per share) of its equity share capital to 160% (₹16 per share). 

In terms of dividend payout ratio, a significant percentage of profit is paid as dividends is steady at 30%. At ₹420, the dividend yield of the REC share price is 3.81%. 

Key Valuation Metrics

Earning Per Share (EPS)

The following is the EPS of the REC Share Price of the last 5 years:

FY20	₹18.88
FY21	₹31.82
FY22	₹38.11
FY23	₹42.41
FY24	₹53.72
9MFY25	₹43.95

REC share price growth is driven by a steady rise in its Earnings Per Share over the last five years.

Price-to-Book VS Median Price-to-Book

The book value per share of REC Ltd. is ₹279. As of 1st May 2025, the REC share price is trading at 1.5 times and the 5-year Median Price-to-Book is 0.7 times, indicating the REC share price is trading at slightly expensive valuations. 

However, the valuations are slightly down. The price-to-book ratio has declined from 2.5 times to 1.5 times in the last six months

Source: Screener

REC Share Price Future Growth Potential 

REC Ltd. has a diversified loan portfolio with a mandate of up to 33% loans in the infrastructure and logistics sectors. It focuses on sectors like metro, port waterways, airport, oil & refinery, roads & highways, IT infra, steel infra, and the health sector.

The management has guided the loan book to grow at ~15-17% for the years to come and reiterated its confidence of reaching a loan book of ₹10 lakh crore by 2030. 

Focus on Renewable Sector

In recent years, it has increased its focus on renewables, including hydro. In FY24, it disbursed 38% of the sanctioned loan to the renewable energy sector. The company plans to have 30% of the projected loan book of about ₹10 lakh crore in renewables, including nuclear energy, by 2030. 

International Expansion

REC Ltd. is expanding its financing activities beyond borders. It has sanctioned a green hydrogen ammonia project in Oman. And, it is also exploring financing international transmission line projects in Sri Lanka, Bhutan, Nepal, and Bangladesh. 

Strategic Borrowing Plan

REC Ltd. has stable credit ratings for long-term borrowings from international as well as domestic credit rating agencies. It helps to raise funds from the market at competitive rates with a mix of domestic and international sources. 

REC is also one of the four companies allowed by the Government of India to raise low-cost 54EC capital gain tax-exempt bonds. In September 2024, it raised $500 million through the issue of green bonds to support renewable energy initiatives. These are 5-year bonds having a coupon rate of 4.75% per annum. 

Such an arrangement helps REC to optimize its capital structure and generate higher returns for shareholders. 

Key Risks

REC Ltd. benefits from its unique business structure and high client concentration of state-backed entities. In a recent management commentary, REC will be increasing lending to private sector enterprises to 30% by 2030. 

Also, REC is lending to infrastructure projects beyond its core business of lending to power projects, which can add to risks.

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