More Stories

Informist, Monday, Apr. 27, 2026

By Priyasmita Dutta

NEW DELHI – State-owned REC Ltd. is expected to report a fall in its net profit for the March quarter, the first time in 14 quarters and the sharpest in six years, owing to weak disbursements and lumpy repayments. Adverse financial impact from exchange rate fluctuations on their foreign-currency-denominated loans can also dent the bottom line, analysts tracking the lender said.

Not just REC, but all power-sector financiers are expected to see muted disbursements and growth in assets under management during the March quarter, brokerages said. REC will announce its financial results for the March quarter on Tuesday. 

REC's net profit is expected to fall 4% on year to INR 40.77 billion, according to the average of estimates from four brokerages. Sequentially, the net profit is expected to rise a paltry 1%. The estimates for net profit range from INR 39.05 billion by ICICI Securities Ltd. to INR 43.86 billion by Motilal Oswal Financial Services Ltd.

REC's disbursements are expected to decline 2% on year, leading to muted AUM growth of 3% on year, brokerage Motilal Oswal said. The power financier has discontinued giving a quarterly break-up of its disbursements. In the first nine months of 2025-26 (Apr-Mar), the lender's disbursements had grown 14% on year to INR 1.65 trillion. Its total loan assets during the same period grew 3% on year to INR 5.82 trillion.  

ICICI Securities had a more optimistic view on REC's loan growth by the end of the March quarter. It projected the total loan book to grow 5% higher on year at the end of March to INR 5.86 trillion. Analysts said that the management's guidance on the disbursements and loan book growth will be closely monitored. 

The net interest income during the March quarter is expected to fall 15% on year to INR 52.23 billion, as per the average of estimates from four brokerages. Sequentially, it is seen down 1%. Estimates for net interest income range from INR 51.32 billion by ICICI Securities to INR 53.48 billion by brokerage Motilal Oswal. 

"We expect forex losses to dent P/L (profit and loss) given the dollar appreciation during the quarter," Equirus Securities Pvt. Ltd. said. This is likely to impact the net interest income as the company's interest expense may go up, given its higher reliance on external commercial borrowing in the last few fiscals. At the end of December, 55% of REC's outstanding borrowing was through domestic bonds, 15% through term loans, 27% through external commercial borrowing, and 2% through foreign currency non-resident (banks) loans. 

REC, among the largest borrowers in the corporate bond market, has been rated 'AAA' for nearly two decades and enjoys some of the lowest interest rates in the market. REC's capital adequacy ratio for the first nine months of FY26 was 24.26%, slightly lower than 25.33% in the corresponding period last year. The cost of funds at the end of December was 7.30%, 15 basis points higher than a year ago.  

Equirus Securities also expects REC's net interest margin to dip marginally on a sequential basis during the quarter under review. Its net interest margin at the end of December was 3.52%, compared with 3.64% end of December 2024. The brokerage said that the management's guidance on REC's growth trajectory, if the rate cycle reverses, will be a key item to monitor. 

REC, formerly known as Rural Electrification Corp., is a non-banking financial company under the power ministry, and lends to state electricity boards, state-owned power utilities, rural electric cooperatives, and independent power producers. At 0920 IST, the company's shares traded at INR 379.40 on the National Stock Exchange, up 1.4% from the previous close. 

Brokerages have divergent views on the provisioning requirement or expected write-back in the March quarter. REC has been restructuring its assets and has been seeing write-backs over the last few years. ICICI Securities expects the lender's provisions to halve on year to INR 3.52 billion in the March quarter, while brokerage Motilal Oswal expects a write-back of INR 3.78 billion. The latter will be a bigger boost to the bottom line. "Resolution of Project Sinnar in Jan-Mar is expected to lead to provision reversals," Equirus Securities said. 

Of the four brokerage reports on REC available with Informist, all have a 'buy' rating on the power sector financier with an average target price of INR 466 per share. Its share price has improved 3% since the lender detailed its December quarter results on Jan. 29. 

Following are the Jan-Mar earnings estimates for REC from four brokerages in descending order of the estimate of net profit in INR billion:

End

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

Edited by Akul Nishant Akhoury

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2026. All rights reserved.