REC Vs PFC Share Prices: Which Powerpack Maharatna PSU Stocks To Buy In July 2024?

Two Maharatna PSU stocks are top picks to buy in July month. These two stocks are key financiers of projects involving India's power sector. Accordingly, the NBFCs are REC Ltd and its parent company Power Finance Corporation. YTD, REC stock has surged by 37%, while PFC zoomed by over 35%.

Brokerage Stoxbox gives both technical and fundamental views on REC and PFC with buy recommendations.

Power Finance Corporation (PFC): (BUY, Target Price: Rs 572)

Technical Views:

Stoxbox in its report said that the PFC increased 492% from the lows in June 2022, after which it entered an accumulation phase. This indicates that committed investors continue to hold their holdings and add to their positions.

Further, the brokerage believes that the price reclaimed its polarity, followed by a pivotal resistance level with strong volume and momentum. Additionally, it said, currently, the price is supported by the pivotal trendline, offering an excellent risk-to-reward ratio for a new entry.

Fundamental Views:

Stoxbox highlighted two investment rationales for PFC. These are:

1. PFC's Strategic Role in India's Clean Energy Sector and Diversified Revenue:

With schemes like RDSS and LPS supporting the distribution sector and significant capital expenditure in power, PFC's specialized financing activities thrive. Its commitment to initiatives like the rooftop solar scheme (PMSY) highlights a strong push towards renewable energy. Additionally, PFC's recent expansion into infrastructure financing diversifies its portfolio, promising increased revenue streams. With over 30 years in the power sector and a focus on energy transition, PFC is primed for sustained growth and stability in the medium to long term.

2. Improving Asset Quality Bringing Financial Stability:

Focused on sustainable loan book expansion in power and infrastructure, PFC anticipates similar growth next year. Resolving stressed assets like Lanco Amarkantak and Shiga Energy by FY25, alongside prudent lending, enhances profitability and investor trust, affirming PFC's commitment to financial resilience and high asset quality standards in power sector financing.

Currently, the REC's share price is at Rs 534.05 apiece with a market cap of Rs 1,76,241.93 crore. Stoxbox said, "We recommend BUY PFC from CMP-526 for the target of 572 with a stop loss of 506 in the short term."

Incorporated on July 16th, 1986, Power Finance Corporation Ltd. is a Schedule-A Maharatna CPSE and is a leading Non-Banking Financial Corporation in the Country. PFC's registered office is located in New Delhi and regional offices are located in Mumbai and Chennai.

REC Ltd: (BUY, Target Price: Rs 606)

Technical Views:

As per Stoxbox, the price of REC experienced a rapid increase of 537% from the lows in June 2022, after which it entered an accumulation phase. This indicates that committed investors continue to hold their holdings and add to their positions.

Notably, the price then reclaimed its polarity resistance level with strong volume and momentum. Brokerage stated that currently, the same trendline supports the price, offering a good risk-to-reward ratio for a new entry.

Fundamental Views:

While adding the stock to its top picks, Stoxbox highlighted two key factors as its investment rationale. These are:

1. Robust order book set to boost revenue growth:

REC expects to increase its renewable energy portfolio to about 30% by the end of 2030. Keeping in view such targets, last year, the company sanctioned renewable projects worth Rs. 1,36,000 crores. Also, in the current year, the company has a huge pipeline of projects amounting to more than Rs 1,75,000 crores. Since the turnaround time for renewable projects is usually higher and the project commissioning period is around 2-3 years, the company expects a lot of disbursements from the renewable energy portfolio.

2. Power demand will increase due to a positive sector outlook:

With the introduction of the revamped distribution sector scheme (RDSS) and the late surcharge payment rules by the government, the power sector is set to improve overall. Along with the generation and distribution of power, a lot of CapEx will also be required to set up distribution infrastructure. Hence, the company expects a good business opportunity from the distribution sector and hopes to reap benefits by increasing its AUM.

At present, REC's share price is at Rs 580.35 apiece with a market cap of Rs 1,52,819.15 crore. Stoxbox said, "We recommend BUY RECLTD at CMP-557 for the target of 606 with a stop loss of 537 in the short term."

Backed by PFC, REC Ltd is also a Maharatna company. REC is a solar panel manufacturer, trusted for almost three decades. Since our founding in 1996, REC has gone from industry pioneer to thought leader and front-running innovator.

REC has evolved and expanded its financing mandate to cover the entire Power-Infrastructure sector comprising Generation, Transmission, Distribution, Renewable Energy and new technologies like Electric Vehicles, Battery Storage, Green Hydrogen etc. More recently REC has also diversified into the Non-Power Infrastructure sector comprising Roads & Expressways, Metro Rail, Airports, IT Communication, Social and Commercial Infrastructure (Educational Institutions, Hospitals), Ports and Electro-Mechanical (E&M) works in respect of various other sectors like Steel, Refinery, etc.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.