Gold prices just lower; monthly gains on track
Investing.com - UBS has lowered its price target on REC Ltd (RECL:IN) to INR550.00 from INR620.00 while maintaining a Buy rating on the stock, citing reduced medium-term growth estimates.
The power sector lender reported assets under management (AUM) growth of 10.4% year-over-year and 3% quarter-over-quarter, which aligned with UBS estimates and exceeded market concerns of single-digit growth. The firm’s renewable energy portfolio showed particularly strong performance with 49% year-over-year growth, while non-renewable generation growth was more moderate at 2%.
Net interest income increased by 17% year-over-year, matching UBS expectations, though pre-provision operating profit grew at a slower 5% due to losses from fair value changes. The company benefited from negative provisions at 0.4% of AUM during the quarter, resulting from write-backs due to declining Stage 1/2 provisions and resolution of a non-performing asset.
REC’s profit after tax reached Rs44.5 billion, exceeding UBS estimates by 8%. The company has provided guidance for 11-13% AUM growth in fiscal year 2026, with UBS forecasting 12% growth while noting potential upside if disbursements remain strong in the second half.
The revised price target of INR550 implies a valuation of 1.4 times FY27 earnings per share, reflecting UBS’s adjusted outlook for REC’s medium-term growth prospects.
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