Is REC Ltd overvalued or undervalued?

As of 8 August 2025, REC Ltd's valuation grade has moved from attractive to very attractive, indicating a significant improvement in its perceived value. The company is currently considered undervalued, supported by a PE ratio of 5.94, a Price to Book Value of 1.28, and a PEG ratio of 0.39. These figures suggest that REC Ltd is trading at a discount compared to its earnings growth potential.
In comparison to its peers, REC Ltd's PE ratio is notably lower than Life Insurance, which stands at 11.83, and Bajaj Finance, which is at 31.31. Additionally, the EV to EBITDA ratio of REC Ltd at 10.54 is more favorable than Bajaj Finserv's 12.5, reinforcing the notion that REC Ltd offers better value relative to its industry counterparts. Despite recent underperformance against the Sensex over the past year, with a decline of 34.72% compared to the Sensex's 1.23% gain, the long-term perspective shows a robust return of 280.77% over three years, further emphasizing the company's potential for recovery and growth.