Check Before You Invest : REC Ltd

Q: Which industry/sub-sector does REC Ltd belong to?

REC Ltd belongs to the BFSI sector, operating specifically within the Finance Term Lending segment.

Q: Is REC Ltd a good quality company?

REC Ltd is a good quality company, based on a consistently good multi-year financial track record. This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q: Is REC Ltd undervalued or overvalued?

REC Ltd appears Somewhat overvalued, as its key valuation ratios are higher than their past averages. Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more. Valuation Ratios. Price to Earnings, Current: 5.39, Historic Median: 5.41. Price to Book, Current: 1.04, Historic Median: 1.07. Price to Sales, Current: 1.48, Historic Median: 1.54. EV to EBITDA, Current: 4.95, Historic Median: 10.17

Q: Is REC Ltd a good buy now?

REC Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Q: Total Income growth of REC Ltd?

REC Ltd Operating Income growth is 18.59% for FY-2025, which is above its 5-year CAGR of 13.4%, indicating faster growth.

Q: Return on Assets of REC Ltd?

REC Ltd Return on Asset is 2.7%, which is above its 5-year historical median of 2.5%, indicating improved earnings on assets. Efficiency & Key Metrics. NPM (%), Current: 28.1, Historic Median: 28.1. PPOP (%), Current: 17.34, Historic Median: 20.02. RoA (%), Current: 2.7, Historic Median: 2.5

Q: Return on Equity (ROE) of REC Ltd?

REC Ltd Return on Equity is 21.6% for FY-2025, which is in line with its 5-year historical median of 21.5%, indicating the business is making similar use of its shareholders capital.

Q: Pre-provisioning operating profit margin of REC Ltd?

REC Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 17.34% for FY-2025, which is below its 5-year median(20.02%), indicating decreasing margins.

Q: Net Profit Margin of REC Ltd?

REC Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 28.1% for FY-2025, which is in line with its 5-year median( 28.1%), indicating stable margins.

Q: Does its ROIC exceed its WACC?

REC Ltd return on invested capital (ROIC) is 7.28% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

Check Before You Invest : REC Ltd

BSE: 532955 NSE: RECLTD ISIN: INE020B01018

| Sector: BFSI | Industry: Finance Term Lending

Snapshot

Q.1 Which industry/sub-sector does REC Ltd belong to?

REC Ltd belongs to the BFSI sector, operating specifically within the Finance Term Lending segment.

Q.2 Is REC Ltd a good quality company?

REC Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q.3 Is REC Ltd undervalued or overvalued?

REC Ltd appears Somewhat overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios	Current	5-year Historic Median
Price to Earnings	5.39	5.41
Price to Book	1.04	1.07
Price to Sales	1.48	1.54
EV to EBITDA	4.95	10.17

Q.4 Is REC Ltd a good buy now?

REC Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

How has it performed on generating Profits?
By checking its Total Income growth, NPM, PPOP, RoA and RoE compared to its last 5-year median.
How efficiently has it grown and managed operations?
By checking its Total Asset growth.
How strong is its Capital position and Asset Quality?
By checking its Capital Adequacy Ratio (CAR), GNPA and NNPA.

A: What are the trends in income and profitability?

Q.1 Total Income growth of REC Ltd?

REC Ltd Operating Income growth is 18.59% for FY-2025, which is above its 5-year CAGR of 13.4%, indicating faster growth.

Q.2 Return on Assets of REC Ltd?

REC Ltd Return on Asset is 2.7%, which is above its 5-year historical median of 2.5%, indicating improved earnings on assets.

	Current Level	5-year Historic Median
NPM (%)	28.1	28.1
PPOP (%)	17.34	20.02
RoA (%)	2.7	2.5

Q.3 Return on Equity (ROE) of REC Ltd?

REC Ltd Return on Equity is 21.6% for FY-2025, which is in line with its 5-year historical median of 21.5%, indicating the business is making similar use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of REC Ltd?

REC Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 17.34% for FY-2025, which is below its 5-year median(20.02%), indicating decreasing margins.

Q.5 Net Profit Margin of REC Ltd?

REC Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 28.1% for FY-2025, which is in line with its 5-year median( 28.1%), indicating stable margins.

Q.6 Does its ROIC exceed its WACC?

REC Ltd return on invested capital (ROIC) is 7.28% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

B: Does the bank grow efficiently and manage its operating costs?

Q.7 Total Asset growth of REC Ltd?

REC Ltd Total Asset growth is 12.14% for FY-2025, which is in line with its 5-year CAGR of 12.18%, indicating stable growth.

C: How strong is the bank’s capital position and asset quality?

Q.8 Capital Adequacy ratio of REC Ltd?

REC Ltd Capital Adequacy ratio (CAR) is 25.99% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Q.9 Asset Quality of REC Ltd?

REC Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 1.35% for FY-2025, which is below its 5-year median 3.42%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 0.39% which is below its 5-year median( 1.04%), indicating improving asset quality.

Ownership & governance

D: Promoter shareholding and pledge status of REC Ltd?

Q.1 Promoter shareholding and pledge status of REC Ltd?

Promoters hold 52.63% of the REC Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does REC Ltd performance compare with that of its Peers?

Q.1 AUM Growth of REC Ltd vs Industry Peers?

REC Ltd AUM CAGR is 12.18%, compared to the 5-year industry median CAGR of 12.18%, indicating stable growth and maintaining its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of REC Ltd vs industry peers

REC Ltd profit metrics are in line with the industry median level of 16.87%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM (%)	28.1	28.1
PPOP (%)	17.34	20.02
RoA (%)	2.7	2.5

Q.3 Operating efficiency of REC Ltd vs industry peers?

REC Ltd ROCE (9.3) is in line with the industry median of (9.3); while the current ROE (21.5) are in line with than the 5-year average Industry ROE (21.5). This shows that the business is positioned in the middle quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM (%)	28.1	28.1
PPOP (%)	17.34	20.02
RoA (%)	2.7	2.5
ROCE (%)	9.9	9.3
ROE (%)	21.6	21.5

Valuation & price assessment

Q.1 Stock return of REC Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 19.2% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	19.2%	25.5%	37.7%	-16.1%

Q.2 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	5.39	5.41	13.42
Price to Book	1.04	1.07	1.13
Price to Sales	1.48	1.54	4.78
EV to EBITDA	4.95	10.17	10.31

Q.3 Valuation ratios of REC Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 1.04 is lower than its historical median of 1.07, indicating that the stock is trading below its historical average valuation.

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Check Before You Invest : REC Ltd

Snapshot

Performance Analysis

Ownership & governance

Peer comparison (industry-wise, mcap)

Profit Metrics

Operating Efficiency

Valuation & price assessment

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