Current Rating and Its Significance
MarketsMOJO’s Sell rating for REC Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This recommendation is based on a comprehensive evaluation of the company’s quality, valuation, financial trend, and technical indicators. The rating was revised from Hold to Sell on 29 January 2026, reflecting a shift in the overall assessment of the stock’s prospects.
Quality Assessment
As of 15 February 2026, REC Ltd maintains a good quality grade. This suggests that the company continues to demonstrate solid operational fundamentals, including stable earnings generation and a reliable business model within the finance sector. Despite this, the quality alone is not sufficient to offset other concerns impacting the stock’s outlook.
Valuation Perspective
The valuation grade for REC Ltd is currently assessed as fair. This indicates that the stock is neither significantly undervalued nor overvalued relative to its peers and historical averages. Investors should note that while the price may appear reasonable, it does not offer a compelling margin of safety or upside potential given the company’s recent performance and market conditions.
Financial Trend Analysis
The financial trend for REC Ltd is described as flat, signalling a lack of meaningful growth or deterioration in key financial metrics. As of 15 February 2026, the company reported a profit before tax (PBT) of ₹5,095.53 crores for the latest quarter, which is the lowest in recent periods. Net profit after tax (PAT) stood at ₹4,052.44 crores, reflecting a decline of 6.1% compared to the previous four-quarter average. Earnings per share (EPS) also hit a low of ₹15.39, underscoring the subdued earnings momentum.
Technical Indicators
From a technical standpoint, REC Ltd is currently rated as mildly bearish. The stock has experienced consistent downward pressure, with a one-day decline of 1.04% and a one-week drop of 6.86%. Over the past month, the price has fallen by 5.48%, and the six-month return is negative at -10.38%. Year-to-date, the stock has declined by 2.77%, and over the last twelve months, it has underperformed the broader market significantly, delivering a negative return of -15.27% compared to the BSE500’s positive 11.06% return.
Performance in Context
The latest data as of 15 February 2026 highlights that REC Ltd has underperformed the market and its sector peers over multiple time frames. The flat financial trend combined with the mildly bearish technical outlook and fair valuation contribute to the cautious Sell rating. Investors should be aware that the company’s recent quarterly results indicate pressure on profitability and earnings, which may weigh on near-term stock performance.
Implications for Investors
For investors, the Sell rating suggests prudence in holding or acquiring REC Ltd shares at current levels. While the company’s quality remains good, the lack of financial growth and negative price momentum imply limited upside potential. The fair valuation does not provide a strong incentive to buy, especially given the stock’s recent underperformance relative to the broader market. Investors seeking exposure to the finance sector may wish to consider alternative opportunities with stronger financial trends and more favourable technical setups.
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Summary of Key Metrics
REC Ltd’s current Mojo Score stands at 47.0, down from 50.0 prior to the rating update on 29 January 2026. This score reflects the combined assessment of quality, valuation, financial trend, and technical factors. The company’s midcap market capitalisation places it in a competitive segment of the finance sector, where investors often seek consistent earnings growth and positive price momentum.
Recent Quarterly Results
The company’s December 2025 quarter results reveal challenges in maintaining profitability. The PBT of ₹5,095.53 crores is the lowest recorded in recent quarters, while PAT declined by 6.1% to ₹4,052.44 crores. The EPS of ₹15.39 is also at a low point, signalling pressure on shareholder returns. These figures, current as of 15 February 2026, underpin the flat financial trend and contribute to the cautious outlook.
Market Performance and Outlook
REC Ltd’s stock price has shown consistent weakness over the past year, with a 15.27% decline contrasting sharply with the BSE500’s 11.06% gain. This divergence highlights the stock’s relative underperformance and the challenges it faces in regaining investor confidence. The mildly bearish technical grade suggests that the stock may continue to face downward pressure unless there is a significant improvement in fundamentals or market sentiment.
Conclusion
In conclusion, REC Ltd’s Sell rating by MarketsMOJO reflects a balanced but cautious view of the company’s current position. While the quality of the business remains good, the fair valuation, flat financial trend, and bearish technical signals combine to suggest limited near-term upside. Investors should carefully consider these factors when evaluating REC Ltd as part of their portfolio strategy, recognising that the stock currently faces headwinds that may constrain returns.
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