REC Ltd.
ISIN: INE020B01018 • Market Cap: ₹88,832 Cr
The 5-Pillar Quality Audit for REC Ltd.
Evaluated across Profitability, Financial Health, Historical Compounding, Valuation Safety, and Ownership Governance:
1. Profitability & Capital Efficiency
Weight: 25%Measures operating margins (95.3%), Return on Capital Employed (9.2%), and equity compounding (19.2%).
2. Financial Health & Solvency
Weight: 25%Debt-to-Equity is 6.05 with comfortable interest coverage and clean working capital.
3. Growth & Compounding Track Record
Weight: 20%Historical 3Y Sales CAGR (7.6%) and 3Y PAT CAGR (4.3%).
4. Valuation Multiple & Margin of Safety
Weight: 15%Trades at P/E of 5.54 vs PEG of 0.44 and Dividend Yield of 5.5%.
5. Ownership Quality & Governance
Weight: 15%Promoter holding stands at 52.6%, backed by 32.8% institutional ownership.
Key Fundamental Strengths
Robust Equity Compounding (ROE: 19.2%)
Shareholder equity compounds at a healthy 19.2%, exceeding average Indian equity benchmarks.
Attractive Valuation Margin (P/E: 5.54)
Trading at a P/E multiple of 5.54, the stock offers a favourable risk-reward entry for quality compounding.
Deep Institutional Sponsorship (32.8%)
Mutual funds, domestic DIIs, and foreign FIIs hold 32.8%, providing strong governance scrutiny.
Areas to Watch & Potential Risks
Subdued Capital Efficiency (ROCE: 9.2%)
A sub-12% ROCE suggests return on capital barely exceeds the company's weighted average cost of capital (WACC).
Elevated Financial Gearing (D/E: 6.05)
Debt-to-Equity exceeds 0.9x, meaning substantial operating earnings are absorbed by mandatory interest coverage.
Quantitative Strategy Eligibility
Checking RECLTD against established Indian wealth creation frameworks:
Coffee Can Investing Framework
Fails 10%+ revenue growth or 15%+ minimum capital return benchmark over historical periods.
Quality Factor Screener (High RoIC + Low Debt)
Scorecard of 68/100 or leverage profile sits below strict quality index hurdles.
GARP / Value-Growth Blend
Provides balanced valuation margin with strong profitability scores.
Financial Services Sector Peer Comparison
Compare RECLTD directly against top industry peers by market capitalization:
| Company | 5-Pillar Score | Market Cap | P/E | ROCE | D/E | Scorecard |
|---|---|---|---|---|---|---|
| REC Ltd. (RECLTD)Current | 68/100 | ₹88,832 Cr | 5.54 | 9.2% | 6.05 | — |
| HDFC Bank Ltd. (HDFCBANK) | 74/100 | ₹11.10 Lakh Cr | 14.05 | 12.8% | 1.01 | View |
| ICICI Bank Ltd. (ICICIBANK) | 76/100 | ₹10.06 Lakh Cr | 17.94 | 16.5% | 0.62 | View |
| State Bank of India (SBIN) | 71/100 | ₹9.66 Lakh Cr | 11.20 | 12.2% | 1.38 | View |
| Bajaj Finance Ltd. (BAJFINANCE) | 68/100 | ₹6.72 Lakh Cr | 33.07 | 13.9% | 3.86 | View |
| Life Insurance Corporation of India (LICI) | 87/100 | ₹5.22 Lakh Cr | 8.70 | 37.8% | 0.00 | View |
Frequently Asked Questions: REC Ltd.
Q:What is the 5-Pillar Fundamental Score for REC Ltd. (RECLTD)?
REC Ltd. has a RupeeTools Fundamental Score of 68/100, placing it in the 'Solid & Healthy' category. Its pillar scores are: Profitability (79/100), Financial Health (41/100), Growth (55/100), Valuation (95/100), and Ownership Quality (85/100).
Q:Is RECLTD fundamentally strong for long-term investment?
RECLTD currently holds a moderate quality rating of 68/100. While it operates in the Financial Services sector, investors should monitor its debt health before initiating long-term positions.
Q:Does RECLTD pass the Coffee Can Investing filter?
No. RECLTD does not currently meet the strict 15% ROCE and 10% sustained topline compounding threshold mandated by the Coffee Can investing framework.
Q:How does RECLTD compare against other Financial Services peers?
Within India's Financial Services sector, RECLTD trades at a P/E of 5.54 and generates an ROCE of 9.2%. Compare its 5-Pillar score of 68/100 against top sector peers like HDFC Bank Ltd. (74/100), ICICI Bank Ltd. (76/100).
Regulatory & SEBI Research Analyst Compliance Disclaimer:
This 5-pillar fundamental score is an automated quantitative health check generated purely from historical public financial statements, corporate filings, and exchange disclosures for educational and informational purposes only. It does NOT constitute investment advice, a stock recommendation, or a solicitation to buy or sell securities. RupeeTools is not a SEBI-registered Research Analyst. Please consult a SEBI-registered financial advisor before making investment decisions.