0 RECLTD share price target reports by brokerages below. See what is analyst's view on RECLTD share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Outlook & Valuation: REC’s profitability will continue to remain under pressure over FY17-20E as provisions are likely to remain high given the increasing stress in power sector and high level of private restructured loan book (~5.6% of loans). Further, increasing competition from banks will exert some pressure on business growth. Hence, we revise our target price downwards to Rs 145 and rollover our valuation to FY20E. We reduce our target multiple to 0.8x on FY20E ABV (earlier 1.0x on FY19E ABV) to capture uncertainties around private restructured assets. However, we upgrade our rating to BUY from Hold given the recent fall in stock price (↓24% in last six months) which factor most of the negatives. Moreover, the attractive dividend yield of ~7% will restrict any further fall in the stock price.
Rural Electrification Corporation’s (REC) Q3FY18 PAT of ~INR13bn came below estimate due to softer NII traction, following non‐recognition of income on stressed assets (in SDR & S4A restructuring of INR70bn) percolating into further NIMs pressure. GNPLs increased from 2.54% to 2.99% (led by Lanco Anpara where it has exposure of INR12‐13bn), while restructured book dipped to 9.6% (10.8% in Q2FY18), following upgrade in PSU entity. In past few quarters, large part of stress emanated from known accounts and total stress pool (NNPAs + restructured) fell to 11.5% (13.2% in FY17). Business momentum was steady, with >10% YoY loan growth. Management maintained their stance of potential up‐gradations (already started) that will potentially improve performance going ahead. At CMP, the stock trades at 0.8x FY20E P/BV for RoE of 14‐15%, rendering favourable risk‐reward. Maintain ‘BUY’.
Rural Electrification Corporation’s (REC) Q2FY18 PAT at ~INR12bn came below estimate due to muted NII traction following NIMs pressure (lower incremental lending yields as health of stressed utilities is improving, in general and REC, in particular is relatively more focused on better rated utilities). REC has been following RBI norms from FY15 and overall asset quality held in good stead—GNPLs remained flat QoQ though S4A was invoked in a private project (Ratan India) with exposure of INR7.5 bn. Over the last few quarters, large part of stress emanated from known accounts and total stress pool (NNPAs + restructured) fell to 12.5% (13.2% in FY17). Business momentum was steady, with >10% YoY loan growth. Management maintained stance of potential upgradations starting Q3FY18 that will potentially help improve performance going ahead. At CMP, the stock trades at 0.8x FY19E P/BV for RoE of 15‐16%, rendering favourable risk‐reward. Maintain ‘BUY’ with TP of INR231.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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