REC share price jumped by 2.3 percent on Thursday as recovery in PSU stocks continued for the second trading session. REC has recovered nearly 11 percent over the last five trading sessions and the stock is now comfortably higher compared to its yearly low touched recently at Rs 357.35. The yearly low can now act as a strong support on technical charts for REC. The stock is still down by 30 percent over the last six months and long term traders can buy at current levels for decent gains. NSE Nifty closed 207 points higher after facing a volatile session but the sentiment was surely positive.

Stock Performance Overview

REC Limited's stock has experienced notable volatility over the past year. The 52-week range, spanning from Rs. 357.35 to Rs. 654.00, indicates significant fluctuations. The current P/E ratio of 6.92 suggests that the stock is trading at a relatively low multiple of its earnings, which could be attractive to value investors. Additionally, a dividend yield of 4.08% underscores the company's commitment to returning value to its shareholders.

CLSA Upgrades REC to ‘High Perform’ on Strong Fundamentals and Attractive Valuation

Global brokerage CLSA has revised its rating on Rural Electrification Corporation (REC) from ‘Outperform’ to ‘High Perform’, citing strong loan growth, solid return on equity (ROE), and a compelling dividend yield. Despite recent market corrections, CLSA believes REC remains a fundamentally sound investment opportunity with minimal asset quality risks and a well-managed capital expenditure cycle.

The firm has adjusted its target price for REC to Rs 525, slightly lowering it from Rs 540, reflecting updated valuation expectations. CLSA remains optimistic about REC’s mid-teen loan growth trajectory for FY26-27, reinforcing confidence in its financial stability and growth outlook.

CLSA's revised outlook on REC highlights its best-in-class loan growth, robust ROE, and consistent dividend yield. The stock is currently trading at 0.93 times its estimated FY27 book value, making it an attractive valuation opportunity for investors.

"REC stands out due to its strong loan growth, superior ROE, and attractive dividend yield. Despite this, the stock remains undervalued, trading at just 0.93x its FY27 adjusted book value. Hence, we are upgrading our rating from ‘Outperform’ to ‘High Perform,’ with a revised target price of Rs 525," CLSA stated.

Analyst Recommendations and Price Targets

Recent analyst reports provide a positive outlook for REC Limited. Analysts have set a price target ranging from a low of Rs. 525.00 to a high of Rs. 720.00, with an average estimate of Rs. 615.67. This suggests a potential upside of approximately 49% from the current price level. Another set of projections indicates an average one-year price target of Rs. 633.50, with forecasts ranging between Rs. 555.50 and Rs. 756.00. These projections indicate a bullish sentiment among analysts regarding REC's future performance.

Technical Analysis

Support and Resistance Levels

REC's stock faces immediate resistance at Rs. 418, with support established at Rs. 360.30. These levels are crucial for traders to monitor, as a breach above resistance could signal bullish momentum, while a drop below support might indicate further bearish trends.

Actionable Insights

• Given the technical indicators and analyst projections, investors should approach REC Limited's stock with cautious optimism.
• The low P/E ratio and attractive dividend yield present potential value opportunities.
• However, the bearish candlestick patterns and proximity to resistance levels necessitate vigilant monitoring.
• Engaging in a detailed Fibonacci analysis and keeping abreast of sector developments can further inform investment decisions.