$RECLTD Stock Watch | REC Limited

$RECLTD Markets remain on edge. Monday saw PSU lenders PFC and REC trade lower after both boards formally approved their long-pending merger scheme. Under the deal, REC shareholders will receive 88 equity shares of PFC for every 100 REC shares they hold, with the combined entity expected to have a loan book exceeding Rs 11 lakh crore — among India's largest infrastructure lenders. The market's initial reaction was cautious rather than celebratory. REC shares dipped slightly even though the merger creates India's largest power sector financing company, as investors stayed wary given that several approvals are still pending and the deal is only expected to take effect from April 1, 2027. This is a story still unfolding rather than one that is done. Shareholder, creditor and regulatory approvals are the next milestones to watch, with full regulatory clearance expected only by early 2027. The merger would result in equity dilution of roughly 34% on PFC's side, though the government will continue to hold the controlling stake in the combined company. For a stock this closely tied to a multi-quarter corporate action, near-term price moves may say less about REC's underlying power-financing business and more about merger-arbitrage positioning. Long-term investors should track record dates and swap-ratio finalisation closely.