The brokerage, however, reduced the target price to ₹525 from ₹590 as REC is expected to see mid-teen growth instead of the 20% forecast earlier. The revised target price offers 39% upside potential from Monday’s closing price of ₹378.
CLSA said REC’s loan book has witnessed strong growth of 15-21%, driven by distribution companies over the past few quarters. But as distributor company disbursals have peaked, the focus shifts to pending sanction book, it said.
“In spite of all the process-related slowdowns, this sanction pool alone could lead to double-digit to mid-teen loan growth over FY26-27CL,” said CLSA in a note. “With no slippage over the past 2-3 years and control of approvals/agreements in projects, we are less concerned about asset quality during this capex cycle.”
The brokerage said that mostly financing government projects, and the management’s cautious stance offers comfort and limited exposure to merchant power projects, lowers concern over renewable asset quality.
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