Foreign brokerage Bernstein has recommended an 'outperform' rating on power financiers PFC and REC, citing underestimation of the current power cycle by investors and lower NPA risks. The targets set are Rs 620 for PFC and Rs 653 for REC, implying potential gains of over 23% and 21% respectively. Despite recent rallies, these stocks are trading at cheaper valuations and offer better returns for investors. Stay updated on the latest business and stock market news, and manage your finances with our useful tools and resources.
PFC and REC: Outlook Remains Positive, Foreign Brokerages Recommend 'Outperform'
Background
Power Finance Corporation (PFC) and REC Limited (REC) are leading non-banking financial companies (NBFCs) specializing in the power sector in India. Both companies provide financial assistance to power generation, transmission, and distribution projects, contributing significantly to India's energy needs.
Recent Development
Foreign brokerage Bernstein has upgraded its rating on PFC and REC to "outperform," highlighting the undervaluation of the current power cycle and reduced non-performing asset (NPA) risks. The brokerage set target prices of Rs 620 for PFC and Rs 653 for REC, indicating potential gains of over 23% and 21%, respectively.
Reasons for Optimism
Top 5 FAQs
1. What is the current rating of PFC and REC by Bernstein? Outperform
2. What are the target prices set by Bernstein? PFC: Rs 620 REC: Rs 653
3. What are the potential gains indicated by the target prices? PFC: Over 23% REC: Over 21%
4. What are the reasons for the positive outlook? Strong power cycle, lower NPA risks, and attractive valuations.
5. What happened in the past that could affect the current situation? PFC and REC have faced challenges in the past due to high NPAs, but these issues have been significantly addressed.
Conclusion
PFC and REC continue to be attractive investment opportunities in the Indian power sector. Bernstein's "outperform" rating and positive outlook reflect the companies' strong fundamentals, improved asset quality, and potential for growth. Investors seeking exposure to the power sector should consider these stocks for their portfolio.
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