REC Q4 net profit soars 33% driven by core income and provision write-back

REC, an infrastructure financier, reported a 33% increase in net profit to ₹4,079 crore in Q4FY24, driven by core income growth and provision write-back. Revenue rose 25% to ₹12,613 crore. Core net interest income increased 29% due to higher disbursements and an expanded net interest margin to 3.60%. REC plans to maintain a net interest margin above 3.55% in FY25, with a slight increase in disbursements to ₹40,000 crore. The company will prioritize power sector projects and aims to increase its private sector lending to 30% by FY30. Renewable energy currently accounts for 10% of REC's assets under management and is expected to reach 30% by FY30. REC aims to become NPA-free by FY25, with no fresh slippages for eight consecutive quarters. A provision write-back of ₹713 crore contributed to the bottom line. REC has a debt-raising plan of ₹1.60 lakh crore for FY25, with 40% to be raised through domestic bonds. It expects borrowing costs to decline in the second half of FY25 and plans to pass on the benefits to borrowers. The board approved a dividend of ₹5 per share, in addition to the ₹11 interim dividend already paid. For FY24, REC reported a 26.2% increase in net profit to ₹14,145 crore, with revenue rising to ₹47,571 crore. Shares rose 9.51% to ₹507.25 on the BSE.

Infrastructure financier REC on Tuesday reported a 33 per cent rise in its consolidated net profit to Rs 4,079 crore in the March quarter, helped by a healthy growth in core income and a provision write-back.

The company's revenue from operations grew 25 per cent to Rs 12,613 crore during the January-March period from Rs 10,113 crore in the year-ago period.

Its core net interest income increased 29 per cent to Rs 4,407 crore in the reporting quarter on the back of a 67 per cent rise in disbursements and a 0.31 per cent expansion in the net interest margin at 3.60 per cent.

Its chairman and managing director V K Dewangan told reporters that the company is confident of maintaining the net interest margin at over 3.55 per cent for FY25.

According to a senior official, there will be a minor uptick in the disbursements in the new fiscal year at Rs 40,000 crore as against Rs 39,374 crore achieved in FY24.

The company will be very choosy on accepting proposals from outside of the power sector, the chairman said, adding that it will go for such proposals only if they are good projects.

Furthermore, Dewangan said the company is also aiming to increase the fund allocation to the private sector to 30 per cent from 10 per cent at present and added increased play in the renewable space, where a bulk of the borrowing requirements come from the private sector, will help achieve the aim by the end of FY30.

Renewable energy accounts for only 10 per cent of the overall Rs 5.09 lakh crore of assets under management at present, and the same will touch 30 per cent by the end of FY30, he said.

On the asset quality front, Dewangan said the company is aiming to be 'NPA (non-performing assets) free' by the end of FY25, once bad assets of over Rs 13,800 crore are resolved.

He said there have not been any fresh slippages for the last eight consecutive quarters, and added that its focus is on ensuring the quality of the book remains strong.

For the quarter under review, it had a provision write-back of Rs 713 crore, which helped the bottom line.

A senior member of the management explained that this was due to higher sums of money set aside for stressed loans in the past and the resolutions yielding more money.

Dewangan elaborated that the write-back is primarily driven by a resolution of an asset in the bankruptcy proceedings, and added that there will be more such provision write-backs in FY25 as well.

It has a debt-raising plan of Rs 1.60 lakh crore for the new fiscal, an official said, adding that a bulk 40 per cent of it will be raised through issuing bonds domestically, another 10 per cent through tax saving bonds, over a third through external commercial borrowings while the balance will come through term loans from banks.

Further, Dewangan said it has sanctioned money for 10,000 electric buses till now, and added that it is targeting to take this figure to 50,000 e-buses by funding both original equipment makers and operators to get buses to ply in metros.

It expects the cost of borrowing to fall in the second half of the fiscal by over 0.50 per cent courtesy of rate cuts from the Reserve Bank of India, and affirmed to pass on the benefits to end borrowers.

The board approved a dividend of Rs 5 per equity share, in addition to the interim dividend of Rs 11 already paid.

The company reported a net profit of Rs 14,145.46 crore for the fiscal year 2023-24, from Rs 11,166.98 crore in the year-ago period.

The income also rose to Rs 47,571.23 crore in FY24 compared to Rs 39,520.16 crore a year earlier.

Shares of the company settled 9.51 per cent higher at Rs 507.25 apiece on the BSE, as against a 0.25 per cent correction on the bourse on Tuesday.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)