REC soars 46% in 1 month; enters top-100 most valued firms by m-cap chart

With Government of India, setting and pursuing the target of achieving 500 GW of renewable energy capacity by 2030, energy transition is expected to drive significant investment in the power sector.

Shares of REC hit a new high at Rs 234.45, as they rallied 5 per cent on the BSE in Thursday’s intra-day trade on strong growth outlook. The stock of state-owned financial institution company has zoomed 46 per cent in past one month. In comparison, the S&P BSE Sensex, was down 0.5 per cent at 02:37 PM, and has slipped 2.4 per cent during the period.

A sharp surge in stock price of REC has helped the stock break into India's top-100 most valuable companies chart in terms of market capitalisation. With Rs 61,735 crore market cap, REC stood at number 100th position in overall ranking, the BSE data shows. REC surpassed state-owned bank, Indian Overseas Bank, which has market cap of Rs 60,525 crore, data shows.

REC holds a strategic position, given REC’s role in financing power sector & implementing policies and flagship programs of the Government of India; the company continues to maintain a strong financial position, is well capitalised with high asset quality, to meet future business growth.

REC has a diversified asset portfolio with no single borrower with more than 10 per cent asset portfolio; and strong relationship and network with stakeholders in Central & State Government enables REC to access new strategic initiatives.

REC plays a key role in implementation of flagship Government of India schemes and financing India’s power sector; rising energy demand in a fast growing economy augurs well for future business growth.

The significant investments are required as per the generation capacity expansion planning report by The Central Electricity Authority of India (CEA). Installed generation capacity by end of financial year 2027 is projected to be 610 GW requiring investments of Rs 14.54 trillion. The Ministry of Power has permitted REC to lend to infrastructure & logistics sector also subject to certain limits. This opens up another large universe of financing avenues for REC.

REC in its FY23 annual report said that the power sector in India, is on course for a long period of high growth and transformation which is visible in the increasing deployment of clean renewables. With Government of India, setting and pursuing the target of achieving 500 GW of renewable energy capacity by 2030, energy transition is expected to drive significant investment in the sector.

The global trend towards Electric Vehicles (EVs) and its fast adoption in India is likely to see an increased demand for electricity. The National Smart Grid Mission, which aims to modernize the country’s power grid is expected to improve grid stability and reduce power losses. The government is also promoting the use of smart meters and digital technologies to improve the efficiency of the distribution network.

The government is promoting measures such as cost-reflective tariffs, improved collection efficiency, and reduction in AT&C losses to improve the financial health of distribution companies. As Indian economy continues to grow fast, with a growing population and the current low level of per-capita electricity consumption, the future outlook for investments in power sector is quite promising over the long term, REC said.