PFC, REC shares surge up to over 5% after Bernstein initiates coverage

Shares of power financing companies REC and PFC surged up to 5.5% on BSE in Wednesday's trade, following the coverage initiation by global brokerage firm Bernstein, which has set target prices of Rs 635 for REC and Rs 620 for PFC.

REC shares jumped to the day’s high of Rs 563.55 while those of PFC surged to Rs 530.20 after the update.

Investors are underestimating the duration and intensity of this power cycle, said Bernstein in its note while stating that the NPA risk is much lower this cycle.


Additionally, the global brokerage firm sees these stocks as leveraged power sector play sport as they show a stronger correlation to power prices and stocks than to their banking peers.

PFC and REC seem to appeal to Bernstein as they have better ROEs and growth in comparison to their power peers, all while trading at cheaper valuations than all of them.

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Both stocks have been multibaggers for their investors. REC shares have multiplied over 3 times in the last one year while the shares of PFC have surged nearly 3 times in the same period.

On a year-to-date basis, REC shares have gained 31% on charts while PFC shares have gained 33%.

Technically too, both stocks are well placed on charts. Both are sustaining above their significant exponential moving averages and oscillating on a mid-range level on RSI, as per the Trendlyne data.

PFC and REC both, are maharatna companies under the administrative control of the Ministry of Power, Government of India. REC is registered with RBI as a Non-Banking Finance Company (NBFC), Public Financial Institution (PFI), and Infrastructure Financing Company (IFC), while PFC was classified as an Infrastructure Finance Company by the RBI in July 2010.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)