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Informist, Thursday, Jul. 24, 2025

By Priyasmita Dutta

NEW DELHI – Buoyed by a 14% rise in interest income, REC Ltd.'s net profit rose a robust 29% during Apr-Jun. The non-banking finance company's net profit stood at INR 44.51 billion, up 5.1% sequentially. The company's interest income rose to INR 145 billion in Apr-Jun, though sequentially it was down 2.9%.

What came in as a big boost to its bottom line, REC had a write back of INR 6.17 billion in the June quarter, as against impairment on financial assets worth INR 4.73 billion a year ago and INR 7.80 billion in the trailing quarter. 

The power sector financier's total income rose 13% during the quarter under review to INR 147.34 billion. The company released its financial results after market hours. On Thursday, shares of the company closed at INR 405 on the National Stock Exchange, up 1.2% from the previous close. Net interest income during the quarter was INR 52.47 billion, up 17% on year.

The state-owned company's healthy interest income comes against the backdrop of its senior management diversifying its fund-raising portfolio to lower their cost of borrowing and maintain interest margin. For the very same reason, REC has been tapping foreign markets to raise funds while also using special securities like the Central Board of Direct Taxes-approved zero-coupon bonds. The company's net interest margin was 3.74% in Apr-Jun, 10 basis points higher than the year-ago figure.  

Out of REC's total outstanding borrowings till June, INR 3.54 trillion is from domestic instruments including zero-coupon bonds and 54EC Capital Gains Tax Exemption Bonds. The remaining INR 1.55 trillion was raised through external commercial borrowings and Foreign Currency Non-Resident (Bank) Account loans. The cost of funds for REC in Apr-Jun was 7 basis points higher on year at 7.12%, the company said in its investor presentation. 

The healthy interest income and revenue from operations during the quarter – which was up 12.5% on year at INR 146.46 billion - was on account of steady disbursements. In the June quarter, disbursements were up sharply by 36% on year at INR 595.08 billion. Sanctions during the same period, however, were down almost 10% at INR 1 trillion. 

As of Jun. 30, the company's loan book was up 10% on year at INR 5.85 trillion. The power financier is aiming to double its loan book to INR 10 trillion by 2030. REC, formerly called Rural Electrification Corp. Ltd., is a non-banking financial company under the power ministry, and it lends to state electricity boards, state-owned power utilities, rural electric cooperatives, and independent power producers.

In line with the company's aim to achieve zero net new non-performing assets by the end of 2025, the net bad loan ratio of the state-owned financier were 0.24% as of Jun. 30, against 0.38% a quarter ago and 0.82% a year ago. Gross bad loan ratio was at 1.05% at the end of June against 1.35% at the end of March and 2.61% at the end of June 2024. REC's provision coverage ratio was 77.05% as on June end, higher than 71.73% end of March and 68.48% end of June last year.

In addition to the financial results, REC's board Thursday also approved an interim dividend of INR 4.60 per share, with Aug. 1 as the record date.  End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta and Deepshikha Bhardwaj

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