REC, Punjab National Bank shares rise up to 6%; here’s why

Shares of state-owned firms REC (Rural Electrification Corporation) and Punjab National Bank (PNB) rallied up to 6% in intraday trade on Wednesday, in an otherwise weak broader market. The PSU stocks got a lift after they signed a deal to co-finance loans to power sector and infrastructure & logistics projects, amounting to ₹55,000 crore.

Boosted by the development, REC shares gained 6.4% to hit a fresh 52-week high of ₹284.50 on the BSE, driven by strong volume. By 12:40 pm, around 18.2 lakh shares changed hands over the counter as compared to the two-week average of 11.01 lakh stocks, while the market capitalisation stood at ₹74,809 crore. Early today, the largecap stock opened marginally higher at ₹268.05 against the previous closing price of ₹267.30.

In a similar trend, shares of PNB also witnessed a gap-up opening at ₹79.92 against the previous closing price of ₹79.34 on the BSE. During the session so far, the PSU bank stock rose as much as 2.1% to ₹81.03, while the market capitalisation climbed to ₹88,892 crore. The stock was trading near its 52-week high of ₹81.35 touched in the previous session.

In a release on Tuesday, REC says it signed a MoU with Punjab National Bank (PNB) to jointly explore the possibility to fund the power sector and infrastructure & logistics sector projects under the consortium arrangement. “REC and PNB will associate with each other to co-finance loans amounting to ₹55,000 crore over next three years,” it says.

The MoU was signed by T.S.C Bosh, Executive Director (Infra & Logistics), REC and Rajeeva, CGM (Corp. Credit Division), PNB in the presence of Ajoy Choudhary, Director (Finance), REC; Shri V K Singh, Director (Projects), REC and other senior officials from REC and PNB.

REC, a maharatna central public sector enterprises, under Ministry of Power, provides long term loans and other finance products for power-infrastructure sector comprising of generation, transmission, distribution, renewable energy and new technologies like electric vehicles, battery storage, green hydrogen etc. The loan book of REC stands at around ₹4.54 lakh crore.

Recently, REC also diversified into the non-power infrastructure sector comprising of roads & expressways, metro rail, airports, IT communication, social & commercial infrastructure (educational institution, hospitals), ports and electro-mechanical (E&M) works in respect of various other sectors like steel, refinery, etc. 

Last month, REC raised $1.15 billion for a 5-year tenor in two tranches from a consortium of six banks as the Mandated Lead Arrangers and Bookrunners (MLABs). Both the tranches taken together saw an aggregate commitment of $550 million from GIFT City IFSC Banking Units (IBUs).

The proceeds from this facility will be utilised to fund power, infrastructure and logistics sector projects as permitted under the ECB guidelines of the Reserve Bank of India (RBI). The funds have been raised under REC’s Market Borrowing Programme of ₹1.20 lakh crore for the year 2023-24.

Earlier this month, the company signed a foreign currency term loan agreement for $100 million with Export Import Bank of India (Exim Bank). This is the first term loan being extended by Exim Bank to REC. The proceeds of the loan will be used towards refinance for on-lending to its borrowers in power, infrastructure and logistics sector for importing capital equipment. 

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