Key Takeaways:
- RECL and PFC fell sharply in 2025 but offer attractive valuations and strong dividend histories.
- Analysts predict a potential 15 to 20 per cent upside based on earnings and current prices.
- RECL paid total dividends of ₹19.7 per share in five instalments, PFC paid ₹16.40 per share in five instalments.
- RECL trades in a narrow range while PFC sits at multi month lows, prompting long term interest.
Shares of Indias public sector enterprises have shown a mixed performance in the calendar year 2025, with oil marketing and select defence stocks outperforming while several energy and rail related counters corrected sharply. Among the heaviest losers were Rural Electrification Corporation Limited and Power Finance Corporation, which have drawn renewed attention from brokers after steep declines.
Why RECL and PFC appeal now
Rural Electrification Corporation, known in the market as RECL, slipped 28.9 per cent in 2025, the biggest decline among state owned enterprises. Power Finance Corporation fell about 22 per cent. Other names in the laggard cohort included Container Corporation of India, Power Grid Corporation of India, Indian Railway Finance Corporation, Rail Vikas Nigam, IRCTC and GAIL, which shed between 11 and 18 per cent each.
Despite those reversals the Nifty PSE index has managed a modest gain of 1.8 per cent so far this year, while the broader NSE Nifty 50 has rallied more than 10 per cent. That divergence has prompted strategists to reappraise individual public sector stocks rather than write off the segment.
Fundamentals and dividends support the case
Analysts at HDFC Securities led by Devarsh Vakil and Vinit Bolinjkar of Ventura Securities highlight valuations and dividend yields as key reasons to consider RECL and PFC. RECL distributed dividends in five tranches during 2025, amounting to a total payout of ₹19.7 per share. PFC matched that frequency with total dividends of ₹16.40 per share this year.
On the earnings front, RECL reported a consolidated net profit of ₹4,414.93 crore for the quarter ended September 2025, down 1.1 per cent year on year, while revenue from operations rose 2.8 per cent to ₹15,152.67 crore. PFC posted a consolidated net profit of ₹4,461.94 crore for the same quarter, down 0.9 per cent, with revenue increasing 7.1 per cent to ₹14,755.50 crore.
BSE data show RECLs earnings per share at ₹20.29 with a price to earnings ratio of 5.40. PFCs EPS stands at ₹17.39 and its PE ratio at 20.17. Brokers argue these metrics make RECL, in particular, look attractively priced, while PFC offers a steadier earnings profile and substantial dividend yield.
Technical picture and near term outlook
Technically, RECL has traded sideways on monthly charts since February 2025, now confined to a narrower ₹330 to ₹380 band. PFC is trading near its lowest levels since March 2024, reflecting the broader pressure on power sector names. Analysts say the combination of depressed prices, recurring dividend payouts and steady operating performance creates a window for selective buying.
Brokerage houses cited in the market note a target upside of 15 to 20 per cent for both names if purchased at opportune levels. Investors should weigh dividend income, balance sheet strength and exposure to sovereign backing when considering these public sector franchises for medium to long term portfolios.
Business Standard reminds readers that the views expressed by brokerages and analysts are their own and not those of the publication. Investors are advised to consult certified financial advisers before acting on any stock recommendations.
