Edelweiss' research report on REC
Rural Electrification Corporation’s (REC) Q3FY17 PAT, at INR 17.5bn (up 28% YoY/flat QoQ), surpassed our estimates on higher other income and lower credit cost. On a positive note, asset quality improved with stressed pool (NNPLs plus restructured book) declining to 11.4% from 13.6% in Q2FY17.
Outlook
Earnings can surprise on positive; given RoE of 16- 17%, dividend yield of 4.5% and rolling forward to FY19E, we upgrade the stock to ‘BUY’ with a revised TP of INR 196 (earlier INR 143).
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