Is REC Ltd overvalued or undervalued?

As of 20 October 2025, the valuation grade for REC Ltd has moved from expensive to very attractive, indicating a significant improvement in its perceived value. The company is currently considered undervalued. Key ratios supporting this conclusion include a PE ratio of 5.72, a Price to Book Value of 0.12, and a PEG ratio of 0.36, all of which suggest that the stock is trading at a substantial discount compared to its earnings and book value. In comparison to peers, REC Ltd's valuation metrics stand out, particularly against Bajaj Finance, which is very expensive with a PE ratio of 38.6, and Life Insurance, which is very attractive with a PE ratio of 11.57. REC Ltd's EV to EBITDA ratio of 9.68 is competitive, further reinforcing its undervalued status in the finance industry. Additionally, while REC Ltd has underperformed the Sensex in the short term, its long-term returns over 3, 5, and 10 years significantly outpace the index, suggesting potential for recovery and growth.