I was listening to a couple of TV interview of the REC CMD.
Apart from Solar and Wind power projects, the company is currently looking at financing Hydro storage, Solar modules manufacturing, and Electric vehicle projects.
The company is betting big on Green Hydrogen, Green ammonia, and round-the-clock power projects, including renewables bundled with thermal, and ethanol manufacturing.
He also said that they are going to borrow Foreign Currency Borrowings which is available at cheaper interest rates for funding Green Energy transition and especially they can lend to the companies who have dollar revenues so that they can save in hedging cost. For this purpose, REC is in the process of setting up a subsidiary for the same in GIFT International Financial Services Centre, Gandhinagar.
While, REC & PFC duo could be a proxy play to the Green energy transition with a good Dividend yield.There may not be any OFS by Govt(Govt holding is at 51%). NPA- they are good and aiming to be a zero NPA company Though the stock is available at ridiculously low P/E, the possible risks are:
(1) Being PSU …Govt frequent policy changes may not augur well for the company
(2) Till now , they were funding Mainly PSU’s and Govt undertakings. But now they are funding to a lot of pvt undertakings which may increase NPA.
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Discl: Had entered at lower level last year and Remain invested for both REC & PFC for long term. It is not a buy or sell recommendation. Please do your own assessment before investing
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