They are more and more depending on HDFC bank for their business which reflects poorly on their other distribution channels. I don’t know why they are depending more on HDFC bank. Why not develop other channels.

Also does anyone know about the dependence of SBI Life and ICICI Life on their banks.

And in their concall they have said that they will compromise on their margins to get growth which clearly shows they are struggling.

Disc: HDFC life is one of the largest position in my portfolio

I would not beyond a P/B of 2.5 on best case for these firms. Yes NPA is improving. But concern is that cycle repeats and current crop of loans from FY21-24 turn sour in FY27. There are expanding beyond core Power loans and funding other areas where they have no experience.

P/B of 2.0 – 2.5 should be fairly priced. Stock can indeed give decent 8-9% returns based growth and additional dividents which is currently 3%.

However if you bought at 150-200 a couple of years ago you can enjoy 10% dividend and ‘10% earnings growth. Easy Pickings and never sell.

Agree , REC has compelling valuations. if REC continues its current run rate with declining trend of NPA for next few quarters, Sky is the limit and it can reach IREDA valuation even exceed IREDA’s…or even Bajaj finance to that matter though Bajaj finance is a bit different kind of business with more focus on retail finance and clients are different and so both may not be comparable to each other.
The scope of business opportunities for REC are much more than that of IREDA if you see the Govt press release as per link in one of my
previous posts. REC is doing all that IREDA does plus much more.
Under Modi Govt , The PSU’s are expected to do well if there is policy continuance. The added benefit is the mouth watering dividend yield , though it has gone down recently after stock appreciation… I had entered when the dividend yield of REC was 10-11%.

However , there is always a risk of time wise correction – re-rating / de-rating keep happening for every stock / sector and for every business there is a cycle and investor fancy which is also applicable to REC / IREDA. Currently , investors and market fancy is for green energy , power financing as power demand is likely to remain high with a rising economy like ours .

If the growth rates remain sluggish for both , then De-rating could happen …more rapidly in case of IREDA due to its Current rich valuation. By the way, REC is Maharatna where as IREDA recently is upgraded to Navaratna.

Discl: Invested in both from lower level. This is not a buy sell recommendation. You may Please do your own assessment before investing.