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Informist, Thursday, May 8, 2025

By Krity Ambey

NEW DELHI – A sharp on-year jump in net interest income helped REC Ltd. report a modest growth in its net profit for the March quarter, despite a high base in the corresponding period a year ago because of a significant write-back. At INR 42.36 billion, the company's net profit grew a little over 5% on year and on quarter for the Jan-Mar period.

The state-owned company posted an impairment on financial instruments of INR 7.80 billion in the March quarter, against a write-back of INR 7.12 billion a year ago and INR 890.30 million in the Oct-Dec quarter.

While analysts had anticipated REC's performance to moderate in the reporting quarter, the final net profit was higher than the expectation of INR 40.24 billion due to a stronger-than-expected growth in income. The financier's net interest income grew nearly 38% on year to INR 58.66 billion in Jan-Mar, against an expectation of around INR 52.09 billion.

The healthy interest income for the quarter was on account of steady disbursements. In Jan-Mar, disbursements rose nearly 16% on year to INR 455.38 billion. The robust interest income took REC's total income for Jan-Mar to INR 151.74 billion, up 20% on year. Sequentially, the company's total income grew 7.1%. 

As of Mar. 31, the company's loan book was up 11.2% on year at INR 5.669 trillion. The power finance company aims to nearly double its loan book to INR 10 trillion by 2030. REC's net interest margin at the end of March quarter was 3.64%, up 4 basis points on year, though marginally lower than 3.66% in the December quarter.

REC, which had set an aim to bring down its net non-performing ratio to zero by the end of 2025, ended 2024-25 (Apr-Mar) with net NPA of 0.38% from 0.74% in Oct-Dec. The non-banking finance company has now shifted its timeline to bring down net NPA ratio to zero to the end of 2026, Chairman and Managing Director Jitendra Srivastava said in a post-earnings press briefing. REC's gross NPA ratio improved to 1.35% as on Mar. 31 from 1.95% a year ago.

The lender's provision coverage ratio was 71.73% as on Mar 31, from 61.88% a quarter ago. Its capital adequacy ratio was 25.99% as on Mar. 31.

For the financial year ended March, REC posted a net profit of INR 157.13 billion, up over 12% on year. Total income for the year was INR 559.80 billion, up from INR 472.14 billion a year ago. The company said its cost of funds was little changed at 7.11% in FY25 from 7.13% in FY24.

In addition to the financial results, REC's board Thursday also approved a final dividend of INR 2.60 per share. Shares of the company ended 4.5% lower at INR 392.40 on the National Stock Exchange. The company declared its earnings after market hours.  End

With inputs by Aaryan Khanna

Edited by Nishant Maher

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