Among the numerous stocks trading on the market, two stand out as strong additions to your portfolio for long-term growth, especially during market dips. One is from the power finance sector, and the other from pharmaceuticals. REC Ltd, a Maharatna public sector enterprise, finances and promotes power projects throughout India. Meanwhile, Natco Pharma, an Indian multinational based in Hyderabad, specializes in both formulations and active pharmaceutical ingredients (APIs), catering to both domestic and international markets.

With a market cap of ₹1,41,641 Cr and ROCE, ROE of 10% and 22.2% respectively, REC Ltd has been consistent in terms of its net profit, net growth and loan disbursement. As of March 31, 2024, REC Ltd has shown strong growth in both its loan book and net profit over the past four years. The loan book stands at ₹5,09,371 crore, up from ₹3,77,418 crore in 2020-21, reflecting sustained expansion in its lending operations. Alongside this, the company’s net profit reached ₹14,019 crore in 2023-24, a notable rise from ₹8,362 crore in 2020-21. This parallel increase in both lending and profitability underscores REC Ltd’s robust financial performance and steady growth trajectory. The industry P/E ratio stands at 19.36, while the company’s current P/E of 9.74 suggests it is undervalued with potential for continued growth. Additionally, FII holdings have increased since the quarter ending March 2024. With India’s primary energy demand expected to rise by 30–60% between 2019 and 2040, REC is well-positioned to play a key role in financing power projects, ensuring sustained revenue generation in the years ahead.

On the other hand, Natco Pharma is also undervalued with a P/E of 15.60. Since the quarter ending December 2023, the company’s operating profit has been growing. The YoY  profits are also on the rise and the current TTM showcases that the trend would continue. Its compounded sales growth over the past 10 years has averaged 18%, and an impressive 42% over the most recent trailing twelve months (TTM). This growth trajectory is further accentuated by its compounded profit growth, reaching 30% and 101% over 10 years and TTM, respectively. The company’s stock price has also mirrored this positive performance, with a compounded annual growth rate (CAGR) of 19% over 10 years and 69% in the last year. This reflects strong investor confidence in the company’s future prospects. Moreover, Natco Pharma’s return on equity (ROE) has consistently demonstrated its ability to generate profits from its shareholders’ investments. With an ROE of 17% over 10 years and 26% in the last year, the company has consistently outperformed its peers and industry benchmarks. Recently, Natco Pharma’s Canadian division invested $8 million in the biotechnology company eGenesis and has developed a new drug application for a generic lung cancer tablet.

While REC has corrected by 25% from its recent high, Natco Pharma has done it by close to 18% and both have rebounded and are currently facing a pullback. Both these stocks can be added in a portfolio with every fall as the overall outlook and the companies’ positions look promising in the long run.