REC’s Net Profit Up 21% YoY to ₹29 Billion in Q1 FY 2024

The company disbursed loans of ₹341.33 billion in Q1 2024, up 174% YoY


REC Limited, a government-owned infrastructure finance company, posted a net profit of ₹29.61 billion (~$361.12 million) in the first quarter (Q1) of the financial year (FY) 2024, an increase of 21% year-over-year (YoY) from ₹24.47 billion (~$298.44 million).

The numbers marked the company’s highest-ever profit in the first quarter of any financial year.

The increase in profit was attributed to improving asset quality and effective cost management.

The company’s revenue from operations in Q1 stood at ₹109.59 billion (~$1.34 billion), a rise of 16%, compared to ₹94.59 billion (~$1.15 billion) during the same period last year.

REC provides financial assistance to state power generators, state governments, state-owned and private power distribution companies, independent power producers, rural electric cooperatives, and private power generators.

The company approved loans to the tune of ₹907.97 billion (~$11.07 billion) in Q1, up 52% from ₹598.95 billion (~$7.31 billion) in Q1 FY 2023. The renewable sector accounted for 16% of the total approved amount.

REC disbursed loans of ₹341.33 billion (~$4.16 billion), up 174% YoY compared to ₹124.42 billion (~$1.52 billion).

Maintaining its growth trajectory, REC’s loan book increased by 17% YoY to ₹4.54 trillion (~$55.37 billion) as of June 30, 2023, against ₹3.88 trillion (~$47.32 billion).

Signifying improving asset quality, the net credit-impaired assets reduced to 0.97% with a provision coverage ratio of 70.46% on non-performing assets as of June 30, 2023.

The company declared an interim dividend of ₹3 (~$0.037) per equity share of ₹10 (~$0.122) for FY 2024.

In May this year, REC listed its green bonds, which raised $750 million (~$61.49 billion) under its global medium-term program of $7 billion (~$573.88 billion), at the GIFT International Financial Services Centre stock exchanges in Gandhinagar. The issue was oversubscribed 3.5 times and saw active participation from 161 investors from across the globe, with Asia Pacific contributing 42%, Europe, Middle East & Africa 26%, and the United States 32%.

REC plans to raise funds through private placement of unsecured or secured non-convertible bonds or debentures of up to ₹1.05 trillion (~$12.81 billion) in one or more tranches.

The board of directors proposed seeking shareholders’ approval for increasing the company’s overall borrowing limit from ₹4.5 trillion (~$54.88 billion) to ₹6 trillion (~$73.18 billion) in any foreign currency equivalent from $16 billion (~₹1.31 trillion) to $20 billion (~₹1.64 trillion) – from domestic and international markets.

The board also approved the incorporation of nine project-specific special purpose vehicles as wholly-owned subsidiaries of REC Power Development & Consultancy to select successful bidders for the implementation of interstate transmission projects.

The company had posted a net profit of ₹30 billion (~$363.6 million) in Q4 FY 2023.