REC Limited and Dalmia Bharat: Weekly Recommendations

The two stocks recommended by SMC Global Securities’ Research Team this week are REC and Dalmia Bharat. These two stocks have shown great potential with positive financial estimates for the next two financial years. So, let’s go through the details of the two stock recommendations for the period between May 12, 2025 and May 16, 2025.

REC Limited

REC share price is ₹384.80 (as on May 9, 2025) and its target price is set at ₹491 with an upside potential of 28%.

REC Limited: Investment Rationale

• REC is financing the entire Power-Infrastructure sector comprising Generation, Transmission, Distribution, Renewable Energy, and new technologies like Electric Vehicles, Battery Storage, Pump Storage projects, Green Hydrogen, etc.
• It has also diversified into the Non-Power Infrastructure sector comprising Roads, Metro Rail, Airports, IT Communication, Ports and Electro-Mechanical (E&M) works in respect of various other sectors. It plays a key strategic role in the flagship schemes of the Government for the power sector.
• Recently, the company has raised ₹5,000 crores through the issuance of bonds. The offering included ₹3,000 crores through 5-year bonds at coupon of 6.87% and ₹2,000 crores through 10-year bonds at coupon of 6.86%.
• The bond issuance witnessed an overwhelming response from market participants, reflecting strong investor confidence in the company’s robust financial position and growth prospects. The bonds have been assigned a “AAA” rating by prominent credit rating agencies.

• REC Limited has entered into a Memorandum of Understanding (MoU) with the Mumbai Metropolitan Region Development Authority (MMRDA) to provide financial support of ₹1 lakh crore for infrastructure development in the Mumbai Metropolitan Region (MMR), focusing on urban mobility, housing, and essential infrastructure. The funding will be disbursed over the next five years.
• During the quarter ended March 2025, the company sanctioned loans amounting to ₹65,365 crores, up 98.8% YoY taking the cumulative amount to ₹3,37,179 crores in FY2025 across various sectors.
• Total disbursement increased by 15.7% YoY to ₹45,538 crores in Q4 FY2025, taking the total to ₹1,91,185 crores, up 18% YoY. Total loan outstanding as on 31st March 2025 stood at ₹5,66,883 crores, up 11.3% YoY.
• The asset quality improved with net credit impaired assets at 0.38% as on March 2025 as compared to 0.86% same period last year. In FY2025, the company resolved 5 assets having an aggregate outstanding loan of ₹6,171 crores. As on 31st March 2025 Capital Adequacy Ratio stood at 25.99%. PCR increased to 71.73% in 31st March 2025 from 61.88% in 31st March 2024.
• In FY2025, the yield on loans has increased to 10.05% from 9.99% in FY2024 due to realignment of interest rates amongst borrowers, while the cost of borrowings has come down to 7.11% from 7.13% in the corresponding period due to judicious mix of borrowing and the innovative derivative structures undertaken by the company for hedging its foreign currency exposure, resulting in improvement in spread by 8 bps.

REC Limited: Shareholding Pattern

Promoters’ shareholding is highest in REC Limited at 52.64%.

REC Limited: Valuation

The company’s large-scale MoU ensures long-term revenue visibility. Expansion into non-power infrastructure (e.g., metro, roads, ports) diversifies revenue streams and reduces sector-specific risks. Significant increase in renewable energy financing also aligns with India’s renewable energy targets and global sustainability trends.

Thus, it is expected that the stock may see a price target of ₹491 in 8 to 10 months’ time frame on a current P/BV of 1.39x and FY26 BVPS of ₹353.39.

REC Limited: Risk

• Regulatory and Market Risks
• High Financial Leverage

Dalmia Bharat Limited

Dalmia Bharat share price is ₹1,918.40 (as on May 9, 2025) and its target price is set at ₹2,183 with an upside potential of 14%.

Dalmia Bharat Limited: Investment Rationale

• Dalmia Bharat is one of India’s pioneering cement companies with a growing capacity, currently pegged at 49.5 MnT, including its subsidiaries, is the fourth-largest cement manufacturing company in India by installed capacity.
• Spread across 10 states and 15 manufacturing units, Dalmia Cement (Bharat) Limited, a subsidiary of Dalmia Bharat Limited, prides itself at having one of the lowest carbon footprints in the cement world globally.
• During Q4 FY25, Sales volume during the quarter declined 2.27% to 8.6 million tonnes from 8.8 million tonnes registered in the corresponding quarter of the previous year. EBITDA jumped 21.25% to ₹793 crores in Q4 FY25 as against ₹654 crores reported in Q4 FY24.
• EBITDA margin improved to 19.4% in Q4 FY25 as against 15.2% in Q4 FY24. Its net debt-to-EBITDA ratio stood at 0.30x during the quarter, compared to 0.18x in the same period a year ago.

• On the development front, it has achieved a milestone of 49.5 MTPA for Installed Cement Capacity and commissioned 2.4 MnT cement capacity in Lanka, Assam and 0.5 MnT of cement capacity in Rohtas, Bihar. This takes the company’s overall installed capacity to 49.5 MnT.
• Further, it has announced strategic investment of ~ ₹3,520 crores to establish a 3.6 MnTPA clinker unit with a 3 MnTPA grinding unit at existing Belgaum plant, Karnataka coupled with a new 3 MnTPA greenfield split grinding unit in Pune, Maharashtra. The Belgaum GU will cater to the underserved Southern Maharashtra markets while enhancing its share in the existing region.
• On the other hand, Pune GU will entirely cater to the untapped Western Maharashtra markets. It has also commissioned a 2.2 MW captive solar power plant at Lanka, Assam, while 13 MW is commissioned under the Group Captive agreements, increasing our total operational RE capacity to 267 MW. Total operational renewable capacity, including the group captive, is expected to reach 595 MW by the end of FY26.
• The management of the company plans ₹3,500 crores CAPEX in FY26, focusing on key sites and efficiency. It targets ₹150-200/ton cost reduction over two years via RE, energy, and logistics improvements. Moreover, it prioritizes profitability, disciplined expansion, and balance sheet strength to reach 75 MTPA capacity by FY28.

Dalmia Bharat Limited: Shareholding Pattern

In the overall shareholding of Dalmia Bharat, promoters have the highest shareholding at 55.84%.

Dalmia Bharat Limited: Valuation

According to the management of the company, the company is backed by a strong balance sheet, capable leadership and a positive profitability outlook and it is well positioned for its next phase of expansion. Despite global economic uncertainties, India’s resilient economy, robust GDP growth, higher capex, and rising disposable incomes support continued cement demand.

The company has reached a key milestone of 49.5 MnT cement capacity and initiated a 6 MnT expansion targeting Western India. Although current profitability was impacted by soft demand and weak pricing, the company remains optimistic about achieving profitable growth through higher volumes, better price realizations, and a sustained focus on cost efficiency.

Thus, it is expected that the stock may see a price target of ₹2,183 in 8 to 10 months time frame on two-year average P/BV of 2.26x and FY26 (E) BVPS of ₹966.01.

Dalmia Bharat Limited: Risk

• High Commodity Price
• Economic slowdown

Conclusion

These two stocks, one from the NBFC sector and other from the cement sector can reach their target price in the coming 8 to 10 months. However, it is always better if you do your analysis before investing and set a stop-loss target. To keep track of your invested stocks, open demat account with SMC Global Securities and invest on the go.

Reference:
https://www.smctradeonline.com/research/wise-money/241

Author: All Content is verified by SMC Global Securities.