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 four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock’s potential risk and reward profile.
Quality Assessment
As of 26 February 2026, REC Ltd maintains a good quality grade. This reflects the company’s solid operational foundation and consistent business model within the finance sector. Despite some recent challenges, the firm’s core competencies and market position remain intact, supporting a degree of stability in its earnings and cash flows. However, quality alone is not sufficient to offset other concerns impacting the rating.
Valuation Perspective
The valuation grade for REC Ltd is currently fair. This suggests that the stock is neither significantly undervalued nor overvalued relative to its peers and historical averages. Investors should note that fair valuation implies limited upside potential from a price perspective, especially when combined with other less favourable factors. The stock’s market capitalisation remains in the midcap range, which can entail higher volatility compared to large-cap counterparts.
Financial Trend Analysis
The financial grade is flat, indicating that REC Ltd’s recent financial performance has been largely stagnant. The latest quarterly results, as of December 2025, show a profit before tax (PBT) of ₹5,095.53 crores, which is the lowest in recent quarters. Profit after tax (PAT) declined by 6.1% compared to the previous four-quarter average, standing at ₹4,052.44 crores. Earnings per share (EPS) also hit a low of ₹15.39. These figures highlight a lack of growth momentum and suggest that the company is facing headwinds in its earnings trajectory.
Technical Outlook
Technically, the stock is mildly bearish. Price movements over recent months have been subdued with a slight downward bias. As of 26 February 2026, REC Ltd’s stock has delivered a 1-day gain of 0.11%, a 1-week gain of 0.18%, but a 1-month decline of 1.90%. Over the past three and six months, the stock has fallen by 0.62% and 2.56% respectively. Year-to-date returns are negative at -0.71%, and over the last year, the stock has underperformed significantly with a decline of 7.61%. This contrasts with the broader BSE500 index, which has generated a positive return of 14.19% over the same period, underscoring the stock’s relative weakness.
Market Performance and Investor Implications
The underperformance of REC Ltd relative to the broader market is a key consideration for investors. While the company’s quality remains good and valuation is fair, the flat financial trend and bearish technical signals weigh heavily on the outlook. Investors should interpret the Sell rating as a signal to exercise caution, particularly given the stock’s recent earnings softness and subdued price action.
Summary of Key Metrics as of 26 February 2026
- Mojo Score: 47.0 (Sell grade)
- Market Capitalisation: Midcap
- Quality Grade: Good
- Valuation Grade: Fair
- Financial Grade: Flat
- Technical Grade: Mildly Bearish
- 1-Year Stock Return: -7.61%
- BSE500 1-Year Return: +14.19%
- Latest Quarterly PAT: ₹4,052.44 crores (down 6.1%)
- Latest Quarterly EPS: ₹15.39
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What This Means for Investors
For investors, the Sell rating on REC Ltd suggests a prudent approach. While the company’s fundamentals retain some strengths, the lack of financial growth and subdued technical signals imply limited near-term upside. Investors holding the stock should consider reviewing their positions in light of the current market environment and the company’s recent performance. Prospective buyers may wish to wait for clearer signs of financial improvement and technical strength before initiating new positions.
Sector and Market Context
REC Ltd operates within the finance sector, which has experienced mixed performance amid evolving economic conditions. The midcap status of the company means it is more sensitive to market fluctuations compared to larger peers. The stock’s recent underperformance relative to the BSE500 index highlights the importance of sector and market dynamics in shaping investor sentiment and stock price movements.
Conclusion
In summary, REC Ltd’s current Sell rating by MarketsMOJO reflects a balanced assessment of its quality, valuation, financial trend, and technical outlook as of 26 February 2026. While the company maintains a good quality profile and fair valuation, the flat financial trend and mildly bearish technical stance underpin the cautious recommendation. Investors should carefully weigh these factors when considering their exposure to REC Ltd in their portfolios.
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