REC shares jump 3%: what’s driving Maharatna’s growth?

Shares of REC Limited, a state-owned Non-Banking Finance Company (NBFC), climbed 3.41% to ₹563.25 during intra-day trade on Wednesday. This surge reflects REC's ambitious strides in the renewable energy sector, driven by the signing of significant Memorandums of Understanding (MoUs) at the 4th Global Renewable Energy Investors Meet & Expo (RE-INVEST 2024) in Gandhinagar, Gujarat.

Key drivers behind REC’s share price surges

REC recently signed non-binding MoUs with renewable energy (RE) developers, amounting to a total of ₹1.12 lakh crore. These agreements span key sectors, including solar, wind, hydroelectric, battery energy, green ammonia/hydrogen, and solar cell projects. Over the next five years, these partnerships are set to fuel REC’s growth, aligning with India’s target of increasing installed non-fossil-based generation capacity from 200 GW to 500 GW by 2030.

In addition to these MoUs, REC has committed to expanding its renewables loan book to over ₹3 lakh crore by 2030, a significant increase from the current 8% to 30% of its overall loan portfolio. By that year, the company’s loan book is projected to reach ₹10 lakh crore. This forward-looking strategy has significantly boosted confidence in the company's stock, making it a key player for those interested in share market investment.

REC’s financial performance and market position

REC, classified as a 'Maharatna' Central Public Sector Enterprise, operates under the Ministry of Power and is registered with the Reserve Bank of India as both an NBFC and Infrastructure Financing Company (IFC). The company’s market capitalisation as of September 18, 2024, stood at ₹1,45,577.79 crore on the BSE. It is also a key component of the BSE 100 index, showcasing its influence on the broader market.

In the past year, REC shares have more than doubled in value, recording a remarkable 121.09% increase. This significantly outperformed the benchmark BSE Sensex, which rose by 23.13% in the same period. Despite currently trading 15% below its 52-week high of ₹653.90, REC remains an attractive option for share market investment.

Outlook for REC shares

REC’s strong focus on renewables and its expanding role in India's energy transition positions the company for continued growth. With nearly ₹2.39 lakh equities worth ₹13.27 crore traded during recent sessions, investor interest remains high. Although REC shares are trading below their peak, the company's robust strategy and commitment to renewable energy make it a promising prospect for long-term investors.