REC Limited Stock Rallies as Management Signals End to Loan Pre-payments, Targets Robust Growth

Energy

29th October 2025, 8:03 AM

REC Limited Stock Rallies as Management Signals End to Loan Pre-payments, Targets Robust Growth

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Stocks Mentioned :

REC Limited

Bharat Heavy Electricals Limited

Short Description :

REC Limited, a major power sector financier, saw its loan book growth significantly impacted by ₹49,000 crore in early loan repayments between July and September 2025. However, the company's management indicated that no further substantial pre-payments are expected in the remaining quarters of the fiscal year ending March 2026. This news boosted REC's stock price on October 29th. REC reiterated its ambitious goal to reach a ₹10 lakh crore loan book by March 2030, implying a growth rate exceeding 13% annually.

Detailed Coverage :

REC Limited, a key public sector enterprise under the Ministry of Power that finances the power sector, experienced a substantial ₹49,000 crore in loan pre-payments during the July to September 2025 period. A significant portion, ₹11,413 crore, originated from the Kaleshwaram Irrigation Project in Telangana, which was executed by Bharat Heavy Electricals Limited (BHEL). These early repayments considerably squeezed REC's loan book growth to 6.6% from an anticipated 16.6% during the period.

However, the sentiment shifted when REC's management communicated to analysts on a conference call that no further such large-scale pre-payments are anticipated for the remaining two quarters of the financial year ending March 2026. This assurance led to a rally in REC's stock price on October 29th, following a period of decline after its earnings report on October 17th.

The company also reaffirmed its strategic objective to expand its loan book to ₹10 lakh crore by March 2030. This target implies a compounded annual growth rate (CAGR) of over 13% from the current level, representing a faster growth trajectory compared to recent years. At the end of March 2025, REC's loan book stood at over ₹5.82 lakh crore, with a market capitalization of approximately ₹97,560 crore.

Impact: The clarity on the cessation of significant loan pre-payments removes a key uncertainty and allows investors to focus on REC's strong future growth prospects, supported by its ambitious ₹10 lakh crore loan book target. This could lead to improved investor sentiment and potentially a higher valuation for REC Limited. Impact Rating: 7/10

Difficult Terms: Loan Book: The total amount of money that a financial institution (like REC) has lent out to borrowers. Pre-payment: Paying back a loan or debt before its official due date. CAGR (Compounded Annual Growth Rate): The average annual growth rate of an investment over a specified period of time longer than one year. It smooths out volatility by assuming profits were reinvested. Market Capitalisation: The total market value of a company's outstanding shares of stock. It is calculated by multiplying the total number of shares by the current market price of one share.