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Brokerage firm Bernstein remains constructive on shares of state-run power financing companies REC Ltd. and Power Finance Corporation (PFC), despite the fall seen by both these companies on Thursday, owing to fears of REC's exposure to the Adani Group.
REC and PFC shares fell 4% each on Thursday. While shares of REC are down 25% from their peak, those of PFC have corrected 22% from their respective record high levels.
Bernstein remains "overweight" on REC with a price target of ₹653, which implies a potential upside of 33% from Thursday's closing levels. It also remains "overweight" on PFC with a price target of ₹620, implying a potential upside of 37% from Thursday's close.
Bernstein wrote in its note that it remains positive on both REC and PFC and it sees the recent correction in both these stocks as an "enhanced buying opportunity".
It highlighted that both the stocks fell on the news from the US SEC and its concerns around Adani Green Energy and Azure. The brokerage said that the street is not realising the fact that the loans given by REC to Azure have nothing to do with the project implied in the orders.
"Also, that operating renewable assets are like bonds which can be easily sold off and even underconstruction ones can always be re-purposed for another contract," Bernstein said in its note.
10 analysts each have coverage on both REC and PFC and all 10 of them have "buy" recommendations on both stocks.
Shares of PFC ended 3.7% lower on Thursday at ₹453.9, while those of REC ended 5% lower at ₹491.2. Both REC and PFC were the top performers on the Nifty PSE index in 2023, with gains of over 200% each. The correction from their respective peaks has trimmed their year-to-date gains to 15% so far.
REC and PFC shares fell 4% each on Thursday. While shares of REC are down 25% from their peak, those of PFC have corrected 22% from their respective record high levels.
Bernstein remains "overweight" on REC with a price target of ₹653, which implies a potential upside of 33% from Thursday's closing levels. It also remains "overweight" on PFC with a price target of ₹620, implying a potential upside of 37% from Thursday's close.
Bernstein wrote in its note that it remains positive on both REC and PFC and it sees the recent correction in both these stocks as an "enhanced buying opportunity".
It highlighted that both the stocks fell on the news from the US SEC and its concerns around Adani Green Energy and Azure. The brokerage said that the street is not realising the fact that the loans given by REC to Azure have nothing to do with the project implied in the orders.
"Also, that operating renewable assets are like bonds which can be easily sold off and even underconstruction ones can always be re-purposed for another contract," Bernstein said in its note.
10 analysts each have coverage on both REC and PFC and all 10 of them have "buy" recommendations on both stocks.
Shares of PFC ended 3.7% lower on Thursday at ₹453.9, while those of REC ended 5% lower at ₹491.2. Both REC and PFC were the top performers on the Nifty PSE index in 2023, with gains of over 200% each. The correction from their respective peaks has trimmed their year-to-date gains to 15% so far.
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