REC Limited’s Loans to Renewable Energy Sector Down 68% YoY in Q2 FY 2022

The company’s net profit increased 25% YoY to ₹27.39 billion in Q2 2021


REC Limited, a public infrastructure finance company, involved in financing power projects, recorded a 15% year-over-year (YoY) growth in its total income in the second quarter (Q2) of the financial year (FY) 2022. The company’s total income rose to ₹100.79 billion (~$1.34 billion) in Q2 FY 2022 from ₹87.91 billion (~$1.17 billion) in the same period last year.

The company provides financial assistance to state power generators, state governments, state-owned and private power distribution companies, independent power producers, rural electric co-operatives, and private power generators.

In Q2 FY 2022, the company’s net profit stood at ₹27.39 billion (~$365.2 million), a 25% increase compared to ₹21.90 billion (~$292.01 million) in Q2 FY 2021.

Its annualized earnings per share for Q2 increased 25.04% YoY to ₹55.47 (~$0.74) from ₹44.36 (~$0.59) in the same period the previous year. The growth was due to the record income, effective cost management, and consequent quarterly profit.

REC net worth jumped 19% to ₹477.67 billion (~$6.37 billion) as of September 30, 2021.

The company’s loan book also increased by 11% to ₹3.87 trillion (~$51.61 billion) as of September 30, 2021. The increase in loan book, addition to asset resolutions, and improved provision coverage allowed REC to reduce the net credit-impaired assets to 1.52% as of September 30. The provision coverage ratio against credit-impaired assets stood at 67.63% as of September 30.

The company disbursed ₹217.3 billion (~$2.89 billion) loans in Q2 FY 2022, compared to ₹288.26 billion (~$3.84 billion) in Q2 FY 2021. Of this, ₹4.8 billion (~$64.07 million) was provided to the renewable energy sector in Q2 FY 2022, a 68.2% decline compared to ₹15.38 billion (~$205.3 million) disbursed in the same period last year.

Disbursements - composition

In the first half (1H) of FY 2022, it disbursed ₹14.4 billion (~$192.13 million) to the renewable energy sector, a 33.8% decrease from ₹21.52 billion (~$287.35 million) disbursed in the same period last year.

According to REC’s investor presentation, Tamil Nadu Generation and Distribution Corporation Limited was the chief borrower with a loan of ₹386.67 billion (~$5.14 billion) at the end of Q2 2022.  Maharashtra State Electricity Distribution Company Limited and Uttar Pradesh Power Corporation Limited, followed with borrowings of ₹222.93 billion (~$2.97 billion) and ₹218.8 billion (~$2.92 billion), respectively.

In Q1, REC registered a net profit of ₹22.47 billion (~$303.16 million) for Q1 FY 2022, increasing 22.2% compared to ₹18.39 billion (~$248.11 million) in Q1 FY 2021.

Last month, the company raised a $75 million five-year secured overnight financing rate (SOFR) linked syndicated term loan.



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