Shares of state-run power financiers REC Ltd. and Power Finance Corporation Ltd. (PFC) were both downgraded by Morgan Stanley in its latest note on Thursday, August 20.Both PFC and REC have been downgraded by Morgan Stanley to "equalweight" from their earlier rating of "overweight".
While the price target for REC has been cut to ₹360 from ₹430 earlier, the target for PFC was cut to ₹410 from ₹510 earlier.The revised price target for REC implies an upside potential of 8% from current levels, for PFC, it indicates an upside potential of 9.3% from Wednesday's closing levels.This is the first downgrade for PFC, which was a "consensus buy" among all 15 analysts who covered it.In its note on Thursday, Morgan Stanley said that the loan growth for both REC And PFC has moderated sharply, while on the flip side, the system and bank credit to the power sector has accelerated.For the June quarter, PFC's loan growth stood at only 4% from last year, while that figure for REC fell to only 1%.The brokerage further said that the growth disconnect for the two companies has been much greater than they had anticipated.Any potential recovery for both REC and PFC from hereon, will only be gradual, according to Morgan Stanley, who, as a result, has also cut its earnings estimates for both these companies.14 analysts cover REC as well, of whom 10 have a "buy" rating and four others have a "hold" recommendation on the stock.
It still does not have any "sell" rating from the analysts that cover the stock.The consensus estimates of price targets among analysts indicate a 32% upside for PFC, while for REC, the upside potential is 29%.Shares of PFC are trading 1.7% lower on Thursday after the downgrade at ₹368.25.
The stock is now up only 1.4% so far for the year.Shares of REC are trading 1.5% lower on Thursday at ₹332.
The stock is now down 10% this year.
Shares of state-run power financiers REC Ltd. and Power Finance Corporation Ltd. (PFC) were both downgraded by Morgan Stanley in its latest note on Thursday, August 20.Both PFC and REC have been downgraded by Morgan Stanley to "equalweight" from their earlier rating of "overweight". While the price target for REC has been cut to ₹360 from ₹430 earlier, the target for PFC was cut to ₹410 from ₹510 earlier.The revised price target for REC implies an upside potential of 8% from current levels, for PFC, it indicates an upside potential of 9.3% from Wednesday's closing levels.This is the first downgrade for PFC, which was a "consensus buy" among all 15 analysts who covered it.In its note on Thursday, Morgan Stanley said that the loan growth for both REC And PFC has moderated sharply, while on the flip side, the system and bank credit to the power sector has accelerated.For the June quarter, PFC's loan growth stood at only 4% from last year, while that figure for REC fell to only 1%.The brokerage further said that the growth disconnect for the two companies has been much greater than they had anticipated.Any potential recovery for both REC and PFC from hereon, will only be gradual, according to Morgan Stanley, who, as a result, has also cut its earnings estimates for both these companies.14 analysts cover REC as well, of whom 10 have a "buy" rating and four others have a "hold" recommendation on the stock. It still does not have any "sell" rating from the analysts that cover the stock.The consensus estimates of price targets among analysts indicate a 32% upside for PFC, while for REC, the upside potential is 29%.Shares of PFC are trading 1.7% lower on Thursday after the downgrade at ₹368.25. The stock is now up only 1.4% so far for the year.Shares of REC are trading 1.5% lower on Thursday at ₹332. The stock is now down 10% this year.
