Multibagger power financing stocks, Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), came under bulls’ radar in Thursday’s session, July 10, after global brokerage firm Morgan Stanley gave an optimistic outlook on both state-owned companies.
The brokerage-initiated coverage on both stocks with an ‘Overweight’ rating, assigning a target price of ₹508 for Power Finance Corporation, indicating a 10% upside from Wednesday’s closing price. For Rural Electrification Corporation, it set a target of ₹485 apiece, suggesting a 23% upside from the recent close.
Following this development, both stocks witnessed healthy demand on Dalal Street, with PFC shares gaining 3.12% to touch the day’s high of ₹430.75, while REC shares rose 2.5% to hit ₹401.45 apiece.
According to the brokerage, PFC and its peer REC are well-positioned to clock around 12% annual loan growth between FY25 and FY28, which it expects to be driven by strong disbursements across renewable energy, thermal projects, transmission lines, and power distribution infrastructure.
Morgan Stanley projects return on equity for both companies to stay strong at 17–19%, supported by stable margins, healthy asset quality, and minimal loan slippages. The report also pointed out attractive valuations—both stocks trade at just 5–6 times their estimated FY27 earnings—making them attractive long-term plays.
Add to that the high dividend yields (around 3.8–4.5%) and signs of steady deleveraging and improved asset-liability management, and the brokerage says the risk-reward looks compelling.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.