REC shares rise over 2% as RBI finalises favourable project finance norms; CLSA sees 37% upside

By Aditya Bhagchandani Published on June 20, 2025, 09:30 IST
Shares of REC Limited climbed 2.25% to ₹392.30 on Friday, June 20, after the Reserve Bank of India released its final guidelines on project financing—offering significant relief to financiers. The final rules are seen as much softer than the earlier draft and have eased concerns over regulatory capital erosion for non-banking financial companies (NBFCs) like REC and PFC.
As per the new RBI norms, the Provision Coverage Ratio (PCR) for projects under construction has been set at 1% of the total project cost, while for under-construction Commercial Real Estate (CRE) exposures, it will be 1.25%. In the operational phase, provisions will ease further—0.4% for regular project exposures, 0.75% for CRE and residential housing, and 1% for operational CRE assets.
CLSA noted that unlike the earlier draft—which suggested standard PCRs of up to 5%—the final guidelines are far more accommodating. Analysts had feared a 200–300 basis point impact on CET-1 ratios for companies like REC, but the final norms significantly reduce that pressure.
CLSA, which has a high-conviction 'Outperform' rating on REC, projects a 37% upside. The brokerage noted that the Ministry of Power is actively working to ease right-of-way and clearance challenges in the power infrastructure space—key hurdles that REC and PFC had cited in their lowered FY25 growth guidance.
The new norms, effective October 1, also shift focus to better project appraisal. Disbursements will now only be permitted after securing all regulatory approvals and land access, as per CLSA.
REC's market cap now stands at ₹1.03 lakh crore, and the rally is seen as a positive response to RBI's calibrated and sector-sensitive regulatory approach.
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Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.

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