REC Limited DCF Valuation
RECLTD · Financial Services · Current price ₹307.8
REC Limited cash-flow valuation
Our residual income (excess return on book) values REC Limited at ₹690 per share. Book value plus the present value of returns earned above the 11.6% cost of equity. It carries 30% of the weight in our published estimate of ₹939. A discounted cash flow is only as good as the cash-flow path it assumes, so the assumptions behind it are listed in full below.
Try your own assumptions
Prefer to build the discounted cash flow yourself? The DCF calculator below opens pre-filled with REC Limited's reported free cash flow, net debt and share count, so you can set your own growth and discount rate.
How we got this fair value
Every number below is part of the same estimate for REC Limited. Nothing here is a target price or a forecast of where the share price will go.
The inputs are thin or the models disagree sharply. This is our least reliable kind of estimate, so read the range rather than the single number.
Estimate range ₹690 – ₹1,033
Why this method for this business
The justified P/B and residual income models are most appropriate for a NBFC like RECLTD, as they focus on sustainable ROE and book value, which are critical for assessing the value of a capital-intensive financial institution. The relative P/B model provides a market-based benchmark.
The models behind the number
Each method is weighted by how well its inputs held up for this company.
21% sustainable ROE vs 11.6% cost of equity justifies ~2.9× book
Book value plus the present value of returns earned above the 11.6% cost of equity
- DCF is not suitable for NBFCs due to the high leverage and volatile cash flows
- EV/EBITDA is not appropriate for a financial institution with low EBITDA margins
What was missing
- Lack of forward EPS estimates
- Limited peer data for relative P/B benchmarking
What drives it
14 inputs, grouped by how strong each claim is
- ROE (normalized)
- 21.1%
- Dividend payout
- 7.3%
- Book value / share
- 321 ₹
- Peer-median P/B
- 1.88×
- Peers used
- 5
- Book value / share
- 321 ₹/share
computed
ratios/derived
reported
peer-median
peer-median
computed
- Cost of equity
- 11.6%
building-block
- Near-term growth g
- 19.6%
- High-growth years
- 10 yrs
- Terminal ROE
- 13.9%
- Terminal growth g
- 5%
computed
building-block
faded toward COE + moat
computed
- Moat
- Narrow
- Excess-return horizon
- 10 yrs
computed
computed
- Justified P/B
- 2.93×
two-stage Gordon
Who computed this
A language model (qwen3:8b) selects the valuation method and the judgement inputs for REC Limited: which models suit the business, the moat, the growth and margin assumptions. It does not produce the number. The fair value itself is computed in Python by a deterministic engine (version 2026.08.1) from those inputs, so the same inputs always give the same result and every figure above can be traced to a source.
Estimated 14 Sept 2026. Re-run as new financials and news arrive.
How we value stocks
We estimate what a business is worth from its own economics: cash flows, returns on capital, and a multiple justified by its quality, rather than from where the share price has been. A fair value estimate is a view, not a verdict, and it is only as good as the inputs listed above.
Read the full fair-value methodologyMore on REC Limited
DocStoX estimates are computed from reported financials, for informational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.