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Informist, Tuesday, Apr. 28, 2026

By Priyasmita Dutta

NEW DELHI – State-owned REC Ltd. reported 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 income from operations during the quarter. A rise in its expenses, particularly in finance costs, also contributed to the fall in its bottom line. 

The power sector financier's net profit fell 21% on year to INR 33.62 billion, missing the Street view of INR 40.77 billion by a wide margin. Sequentially, the net profit was down 17%. REC's revenue from operations during the quarter declined 5% year-on-year to INR 143.86 billion, marking the first fall in 13 quarters and the sharpest in 34 quarters. Sequentially, the revenue from operations was down 4%. 

Within revenue from operations, its primary revenue--interest income--fell 6% on year and 3% sequentially to INR 141.02 billion in the quarter under review. It released the financial results during market hours. Shares of the company fell 0.6% to INR 372.85 on the National Stock Exchange immediately after the results were released. They closed at INR 375.80, down 0.6% from the previous close. REC's total income during the quarter was INR 144.06 billion, down 5% on year. 

The company has discontinued sharing quarterly disbursements and sanctions details. Based on calculations, the company's disbursements grew marginally by 0.4% during the March quarter to INR 457.31 billion, while its sanctions grew 16% on year to INR 757.43 billion. For 2025-26 (Apr-Mar), its disbursements grew 10% on year to INR 2.11 trillion and its sanctions grew 21% to INR 4.09 trillion. 

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. Its net profit for FY26 was INR 162.82 billion, up 4% on year. During the same period, the total income was up 6% to INR 591.87 billion. The company's board Tuesday also approved a final dividend of INR 1.55 per share for FY26.

REC's net worth was INR 842.90 billion as of Mar. 31, up 9%. "Capital adequacy ratio was 23.11 % as at Mar. 31, indicating ample opportunity to support future growth," the company's management said in a press release. The interest spread and net interest  margin remained healthy at 2.62% and 3.43%, respectively, the company said, although there was a decline in both the parameters. Its interest spread and net interest margin was 2.94% and 3.63% in FY25, respectively. 

Within expenses, REC's finance costs went up during the quarter, with a loss of INR 941.7 million from foreign currency fluctuations. The losses under this doubled both on year and on quarter. Analysts had flagged that exchange rate fluctuations on their foreign-currency-denominated loans can dent the bottom line in Jan-Mar. The finance cost went up by 2% to INR 89.32 billion during the March quarter. Sequentially, it fell 3%. 

The company's fall in impairment on financial assets, or provisions, during the quarter aided in limiting a further fall in the bottom line. The provisions fell 27% on year to INR 5.72 billion. Sequentially, however, it jumped over four times. "The continued focus on sustainable growth is showing results with the Net Stage-3 loans (non-performing assets) nearly Zero (0.12%) and Stage-2 loans reduced by 75% YoY," the company said. "Without compromising on the asset quality, REC has registered a growth in loan book of around 17,000 crores (INR 170 billion) during the last year. As a result, the loan book is at an all-time high of 5.84 lakh crore (INR 5.84 trillion) as on Mar. 31," it added.   End

Edited by Akul Nishant Akhoury

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