REC Limited Valuation
RECLTD · Financial Services · Current price ₹307.8
Is REC Limited undervalued?
We estimate the fair value of REC Limited at ₹939 per share, against a market price of ₹313. That puts the share price about +200.3% below our estimate, at low confidence. This is our view of what the business is worth, not a target price or a forecast of where the share price will go.
How this fair value is calculated
This estimate comes from 3 methods: Justified P/B (Gordon) (₹939), Residual income (excess return on book) (₹690), Relative P/B (₹604). Each is weighted by how well its inputs held up for this company. The full working, including the assumptions and what data was missing, is set out below.
The range around this estimate
Our estimate for REC Limited spans ₹690 to ₹1,033. That range is wide, which is the honest signal here: read the range rather than the single number. A margin of safety means buying meaningfully below the estimate: the wider the range, the more room the assumptions leave for error.
Valuation multiples
REC Limited trades at a P/E of 5.0x and a P/B of 1.0x, with a dividend yield of 1.4%. Multiples are most useful compared against the company's own history and its sector peers — see the peer comparison for context.
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 methodologyUnderstand the ratios
More on REC Limited
DocStoX estimates are computed from reported financials, for informational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.