| Date | Stock | Entry Price | Position |
|---|---|---|---|
| 21 May 2026 | REC Ltd | ₹337 | Lot 1 |
Why Now
REC has fallen from a 52-week high of ₹429 to ₹336 — roughly 22% off the high. At 5.4x earnings with a dividend yield of 5.38% and promoter holding at 52.6%, the setup fits the Mode 1 framework cleanly.
The stock is trading just above book value of ₹323. That’s not a screaming discount — but for a government-backed NBFC financing India’s power sector infrastructure, near book value with a 5%+ dividend yield is a reasonable entry zone.
Volumes have been quieter. The range is compressing. No major news catalyst driving the entry — just price and setup.
That’s enough.
The Business
REC Limited is a Maharatna PSU and a government-owned NBFC focused exclusively on financing the power sector — generation, transmission, distribution and renewable energy projects. It lends to state utilities, private developers and infrastructure projects.
The business model is straightforward — borrow cheap, lend to the power sector at a spread, collect interest. ROE is 20%. The government owns 52.6% and isn’t selling. The dividend is consistent.
This isn’t a growth story. It’s a yield and range story. The power sector financing cycle in India is long and government-backed. REC is positioned centrally within that financing cycle.
The Range
| Level | Price |
|---|---|
| 52-week high | ₹429 |
| 52-week low | ₹304 |
| Entry — Lot 1 | ₹337 |
| Down from high | ~22% |
| Book value | ₹323 |
| Averaging level | To be decided |
| Exit | Merger at 88:100 swap ratio — April 2027 |