Maintain 'buy' on Rural electrification Corporation (REC) - TP hiked to Rs.277 - Geojit BNP Paribas Financial Services

- Buy rating on REC (Rural Electrification Corporation) is maintained with a higher target price of Rs.277 against the earlier TP of Rs.224. Currently, the stock is quoted in the range of Rs.248.

- 3QFY13 PAT at Rs.1030 crore is above market expectations. The beat mainly came from better spreads and lower provisions.

- NIM at 5.01% against 4.76% in 2Q, mainly because of increase in yields to 12.14% from 11.86% in 2Q.

- Asset quality remained healthy. Net NPA declined to 0.34% from 0.38%.

- Loan growth momentum maintained at 25% versus analysts' estimate of 22%. Short term loans made up just 5% of total disbursement and T&D almost 70%. Majority of the disbursement is in the form of transition finance.

- Management maintains its loan growth target of 20% plus with exposure to the private sector maintained at 12%.

- TP has been hiked to Rs.277 to factor in low NPA and higher growth.

Source : Equity Bulls

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