REC, PFC rally up to 4%, at new high in weak market; zoom over 200% in 1 yr

Shares of state-owned financial institutions, REC and Power Finance Corporation (PFC) rallied up to 4 per cent, hitting their respective all-time highs on the BSE in Wednesday’s intra-day trade in an otherwise weak market.

REC surged 4 per cent to Rs 636.80, while, PFC gained 3 per cent at Rs 567.55 on the BSE. In comparison, the BSE Sensex was down 0.71 per cent at 79,780 at 12:09 pm.

In the past one year, REC (278 per cent) and PFC (215 per cent) have zoomed over 200 per cent, as compared to 22 per cent rally in the benchmark index.

REC and PFC’s are 'Maharatna' Central Public Sector Enterprises (CPSE), non-banking financial companies (NBFCs) categorized as Infrastructure Finance Company (IFC) with the Reserve Bank of India (RBI) and these companies are servicing the financing needs of entire power sector value chain.

REC, along with PFC are designated as nodal agencies for facilitating implementation of Revamped Distribution Sector Scheme (RDSS) which is a reforms-based and results-linked scheme. RDSS has an outlay of Rs 3.04 trillion over a period of 5 years and would be available till fiscal 2026, seeking to financially turnaround power distribution companies (DISCOMs) in the country.

PFC and REC are also the nodal agency for channeling finance towards the rural electrification programme under the Deendayal Upadhyaya Gram Jyoti Yojana (formerly known as Rajiv Gandhi Grameen Vidyutikaran Yojana) and Pradhan Mantri Sahaj Bijli Har Ghar Yojana, or Saubhagya scheme, and the National Electricity Fund Scheme. PFC and REC are the lending partners for the announced discom package.

Furthermore, REC has been nominated as the sole nodal agency to operate the National Electricity Fund Scheme - an interest subsidy scheme introduced by the central government-to promote capital investment in the power distribution sector.

CRISIL Ratings believes REC will continue to benefit from government support, given its strategic role in the implementation of the government’s power sector initiatives. Moreover, REC will maintain its healthy position in the infrastructure-financing segment along with comfortable capitalisation and earnings.