New Delhi: REC Ltd’s standalone net profit fell 23.4 percent year-on-year to Rs 3,391.18 crore in the July-September quarter of 2026-27. It had earned Rs 4,425.86 crore in the same quarter last year. Profit also fell 18.3 percent from Rs 4,149.46 crore in the April-June quarter. The fall came as expenses grew faster than income. Total income slipped 2.4 percent year-on-year to Rs 14,736.77 crore, while total expenses rose 9.7 percent to Rs 10,462.82 crore. For the first half of the year, net profit fell 15.1 percent to Rs 7,540.64 crore, from Rs 8,876.88 crore a year earlier.
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The loan book kept growing. REC’s gross loan assets rose to Rs 6,16,537.35 crore at the end of September, from Rs 5,83,659.36 crore at the end of March, the results showed. In a statement, the company said its loan book grew 5 percent sequentially to Rs 6.17 lakh crore during the quarter. Its assets under management (AUM) rose by Rs 26,537 crore, it said. According to REC, this reiterated “the fact that REC remains the largest standalone financier in the power sector.”
Revenue from operations fell 2.4 percent year-on-year to Rs 14,727.69 crore in the September quarter. Interest income, which makes up almost all of it, edged up 0.6 percent to Rs 14,657.41 crore. The decline came from fee and commission income, which fell 87.4 percent to Rs 59.72 crore from Rs 473.75 crore. Fee income was also down 45.3 percent from Rs 109.13 crore in the April-June quarter. Sequentially, revenue from operations rose 3 percent, as interest income grew 3.3 percent.
Finance costs, the lender’s largest expense, rose 4.3 percent year-on-year to Rs 9,522.98 crore. They were 8.9 percent higher than the Rs 8,748.42 crore of the previous quarter. Provisions also moved against the lender. REC booked an impairment charge of Rs 374.52 crore on financial instruments, against Rs 134.67 crore a year earlier. In the April-June quarter, it had written back Rs 962.52 crore.
Two smaller lines added to the cost increase. The net loss on exchange translation rose to Rs 262.94 crore from Rs 79.45 crore. Corporate social responsibility (CSR) spending rose to Rs 186.32 crore from Rs 17.16 crore.
As a result, profit before tax fell 23 percent year-on-year to Rs 4,273.95 crore, and 18 percent from the previous quarter. REC’s operating margin narrowed to 28.96 percent from 36.74 percent a year earlier. Its net profit margin fell to 23.01 percent from 29.32 percent. Earnings per share dropped to Rs 12.88 from Rs 16.81.
The first-half results followed the same pattern. Total income fell 2.5 percent to Rs 29,068.17 crore. Interest income declined 1.1 percent to Rs 28,844.14 crore, and fee and commission income fell 72.7 percent to Rs 168.85 crore from Rs 617.94 crore.
On the cost side, finance costs rose 1.1 percent to Rs 18,271.40 crore. The net loss on exchange translation climbed to Rs 1,174.23 crore from Rs 130.92 crore, while CSR spending rose to Rs 192.05 crore from Rs 49.48 crore. A net impairment write-back of Rs 588 crore, against Rs 481.93 crore a year earlier, cushioned part of the impact. Profit before tax fell 15.3 percent to Rs 9,483.27 crore. The operating margin for the half-year narrowed to 32.52 percent from 37.51 percent. Earnings per share fell to Rs 28.64 from Rs 33.71.
Total comprehensive income moved the other way. It rose 60.2 percent to Rs 11,346.68 crore in the first half, from Rs 7,081.24 crore. Other comprehensive income swung to a gain of Rs 3,806.04 crore from a loss of Rs 1,795.64 crore. Of that gain, Rs 3,805.53 crore came from hedging-related items. For the September quarter alone, total comprehensive income fell 22.5 percent to Rs 3,950.03 crore.
The consolidated numbers, which include the subsidiary REC Power Development and Consultancy Ltd, showed a slightly smaller decline. Consolidated net profit fell 21.2 percent year-on-year to Rs 3,477.73 crore in the September quarter. It was 17.1 percent lower than the Rs 4,192.76 crore earned in the previous quarter. Consolidated profit before tax fell 20.9 percent to Rs 4,391.14 crore.
Consolidated total income fell 1 percent year-on-year to Rs 15,010.43 crore but rose 3.7 percent sequentially. Income from the sale of services rose to Rs 270.91 crore from Rs 88.42 crore. The subsidiary’s total revenue for the quarter was Rs 285.60 crore and its net profit Rs 96.82 crore, according to the auditors’ review report.
For the first half, consolidated net profit fell 13.6 percent to Rs 7,670.49 crore from Rs 8,880.64 crore. Total income declined 1.7 percent to Rs 29,479.92 crore. Consolidated earnings per share fell to Rs 29.13 from Rs 33.73.
Bad loans fell sharply over the year. REC’s gross credit-impaired assets ratio fell to 0.22 percent at the end of September, from 1.06 percent a year earlier. The net ratio fell to 0.11 percent from 0.24 percent. Stage 3 loan assets stood at Rs 1,380.40 crore, against Rs 1,384.75 crore at the end of March. The company said it resolved a Stage 3 asset of Rs 4.16 crore during the quarter. It added that Stage 2 loan assets fell 80 percent year-on-year to Rs 3,235 crore, “driven by focused recovery efforts and effective monitoring.”
Provision cover on the overall book, however, came down. REC’s total impairment allowance fell to Rs 6,062.53 crore from Rs 6,893.45 crore at the end of March. That took provisioning coverage on the overall loan book to 0.98 percent, from 1.18 percent. Coverage on Stage 1 and 2 loans fell to 0.87 percent from 1.06 percent, while coverage on Stage 3 loans held at 51.12 percent.
The company linked its asset quality to the health of power utilities. “With Ministry of Power’s continued & targeted efforts, the financial health of power utilities continued to improve, reflecting in lower sectoral credit risk premiums,” the statement said. It added that “REC has been adequately passing on these benefits to the sector in line with market and still maintained a healthy NIM of 3.22% during H1 FY27,” referring to its net interest margin.
The capital position strengthened. Standalone net worth rose 14 percent year-on-year to Rs 94,324.91 crore. The capital to risk-weighted assets ratio (CRAR) stood at 24.04 percent, against 23.74 percent a year earlier. The common equity tier 1 (CET1) ratio was 20.91 percent. REC said both were well above the Reserve Bank of India’s (RBI) minimum requirements of 15 percent and 9 percent. Its debt-equity ratio eased to 5.60 times from 6.07 times.
REC said it disbursed Rs 53,541 crore to the power sector in the September quarter and Rs 79,207 crore in the first half. It described both figures as the highest among its peers. The cash flow statement showed a net outflow of Rs 32,880.35 crore on loan assets in the first half, against Rs 15,675.90 crore a year earlier. “The strong power offtake coupled with REC’s relentless focus on technology-driven credit assessment & customer-centric solutions, resulted in strong AUM growth,” the company said.
According to the statement, REC’s renewable energy portfolio grew 27 percent year-on-year to Rs 86,660 crore. Its portfolio in non-power infrastructure and logistics, which it entered recently, rose to Rs 61,637 crore. That is just over 10 percent of total loan assets.
On the funding side, REC raised Rs 19,267 crore through privately placed non-convertible debentures during the quarter. It also issued what it said was India’s first pilot tokenised corporate bond under the Securities and Exchange Board of India’s (SEBI) regulatory sandbox. The issue was for Rs 500 crore and drew bids worth Rs 796 crore, the company said.
The board declared a second interim dividend of Rs 3.50 per share of face value Rs 10 for 2026-27. The record date is October 30, and the dividend will be paid on or before November 21. REC had earlier paid a first interim dividend of Rs 4.25 per share for the year.
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REC’s planned merger into Power Finance Corporation Ltd (PFC) cleared two approvals during the quarter, according to the notes to the results. The board approved the scheme of merger on June 28. REC received the RBI’s no-objection certificate on October 15, and no-objection letters from BSE and the National Stock Exchange (NSE) on October 19. The notes said the scheme remains subject to further statutory and regulatory approvals. These include the approval of shareholders and creditors of both companies and sanction by the Ministry of Corporate Affairs (MCA).
During the quarter, the RBI classified REC as an upper layer non-banking financial company (UL-NBFC). The company said it was in compliance with all requirements that apply to that category.
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