REC Downgraded to 'Hold' by MarketsMOJO, But Strong Fundamentals and Performance Remain

REC, a largecap finance/NBFC company, has recently been downgraded to a 'Hold' by MarketsMOJO on September 2, 2024. This decision was based on the company's strong long-term fundamental strength, with an average ROE of 17.72%.
In the past four quarters, REC has consistently reported positive results, with a growth of 24.96% in PAT (HY) at Rs 7,539.28 crore and the highest net sales (Q) at Rs 13,078.66 crore. The company has also shown a strong dividend payout with the highest DPS (Y) at Rs 16.00.

Technically, the stock is currently in a mildly bullish range, with both MACD and KST technical factors showing a bullish trend. Additionally, REC has a high institutional holding of 35.16%, indicating that these investors have better capabilities and resources to analyze the company's fundamentals compared to retail investors.

In terms of performance, REC has not only outperformed the BSE 500 in the last 3 years, 1 year, and 3 months, but it has also generated a market-beating return of 158.46% in the last 1 year.

However, with an ROE of 20.1, the stock is currently trading at an expensive valuation with a price to book value of 2.2. Despite this, it is still trading at a discount compared to its average historical valuations. Moreover, while the stock has shown a significant return in the past year, its profits have also risen by 25.3%, resulting in a low PEG ratio of 0.4.

Overall, REC's strong long-term fundamentals and market-beating performance make it a 'Hold' for now, with potential for future growth. Investors should keep an eye on the company's valuation and monitor any changes in its fundamentals.