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REC improves net profit in Q1 FY20 year-on-year

REC’s interest income increased by 22 percent from Rs 5,733 crores in Q1 FY19 to Rs 6,972 crores in Q1 FY20
New Delhi: In the June quarter of financial year 2019-20, state-run REC posted a net profit of Rs 1,501 crores, as against Rs 1,468 crores during the corresponding quarter of the previous financial year. The interest income increased by 22 percent from Rs 5,733 crores in Q1 FY19 to Rs 6,972 crores in Q1 FY20 on the back of increased loan book of the company. Loans grew by 20 percent from Rs 2.42 lakh crore in Q1FY2018-19 to Rs 2.91 lakh crore in Q1FY2019-20. The interest coverage ratio of the company has been at 1.46 with an Earnings per Share (EPS) of Rs 7.60 during Q1 FY20.

Net worth

The Net Worth of the company stands at Rs 35,913 crores as on June 30, with a book value per share of Rs 182. While the operational parameters, i.e. sanctions and disbursements, have reflected a healthy uptrend during the quarter, the Capital Adequacy Ratio continues to stay healthy at 17.90 percent in the June quarter to support the future growth of the company.

Asset quality

The asset quality also improved sequentially, as the net NPA levels decreased from 3.79 percent in the March quarter of FY2018-19 to 3.72 percent in the June quarter of the current fiscal year. The Provision Coverage Ratio against the credit-impaired assets under the Expected Credit Loss (ECL) framework has also improved to 48.22 percent in the first quarter of financial year 2018-19. Further, the loans to the government and public sector, forming 88 percent of the loan book, has not shown any indications of credit impairment.

‘Sense a revival in investor sentiment’

Talking about the results, Ajeet Kumar Agarwal, Chairman and Managing Director, said, “We sense a revival of the investor sentiment, as is visible from the healthy growth in our sanctions and disbursements. On the back of a strong financial profile, we have recently raised five-year Reg-S USD Bonds for $650 Million in July 2019 with robust investor demand, helping us to close our largest Reg S bonds issue with the tightest coupon ever of 3.375 percent on our five-year bonds. The company has been the torchbearer for the power sector for the last five decades and we continue to be optimistic about the sector in the times to come.”