EARNINGS IMPACT: REC JUMPS 9.5% TO RECORD HIGH ON STRONG Q4 RESULTS, SOARS 30.5% IN 8 SESSIONS

Shares of REC surged 9.5 percent in intra-day deals today, May 2 to hit a new high of ₹555.45 on the back of strong March quarter (Q4FY24) results. Including today's rally, the stock has extended gains for the eighth straight session, soaring 30.5 percent in this period.

The PSU (public sector undertaking) company posted a 33 percent year-on-year (YoY) jump in its consolidated net profit in the quarter under review to ₹4,079 crore, helped by healthy growth in core income and a provision write-back. It has posted a net profit of ₹3,065.37 crore in the corresponding quarter of the previous fiscal (Q4FY23).

According to REC's financial statement, the public sector company wrote-back provisions worth ₹711.9 crore in Q4, compared to an expense of ₹56 crore in Q3FY24, which aided its profit after tax.

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Meanwhile, its revenue from operations grew 25 percent YoY to ₹12,613 crore during the same period versus ₹10,123.96 crore in the corresponding quarter last year.

Post today's surge, the stock has now skyrocketed a massive 336 percent from its 52-week low of ₹127.40, hit on May 19, 2023. The scrip has soared 273 percent in the last 1 year and over 34 percent in 2024 YTD, giving positive returns in 3 of the 4 completed months this year.

It jumped 12.5 percent in April after a 2 percent rise in March. However, it fell 11.4 percent in February but has risen 20.86 percent in January this year.

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REC is a 'Maharatna' company under the administrative control of the Ministry of Power, Government of India. It is registered with RBI as Non-Banking Finance Company (NBFC), Public Financial Institution (PFI) and Infrastructure Financing Company (IFC).

The company's core net interest income experienced a 29 percent YoY increase, reaching ₹4,407 crore. This rise was driven by a 67 percent YoY increase in disbursements and a 0.31 percent expansion in the net interest margin (NIM), which stood at 3.60 percent.

REC's chairman and managing director (MD), V K Dewangan, expressed confidence in the company's ability to maintain the net interest margin above 3.55 percent for FY25.

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The firm also announced a final dividend of ₹5 per share, subject to approval of shareholders in the ensuing Annual General Meeting (AGM). This dividend was in addition to the interim dividend ₹11 per equity share, already declared during the financial year in three tranches, thereby making the total dividend for the Financial Year to ₹16 per equity share on face value of ₹10 each.

For the entire financial year FY 24, the company posted its highest-ever net profit at ₹14,019 crore, up 26.8 percent YoY on the back of its improving asset quality and effective resolution of stressed assets, resetting of the lending rates and effective management of finance cost. Meanwhile, the Total income of the company increased by 20.28 percent to ₹47,214.15 crore in FY24 as against ₹39,252.73 crore in FY23.

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REC has stated that it aims to eliminate non-performing assets (NPAs) by the end of FY 25, with plans to resolve bad assets totaling over ₹13,800 crore. To achieve this, the company has a debt-raising plan of ₹1.6 lakh crore for the new fiscal year.

The breakdown of this debt-raising plan includes issuing 40 percent through domestic bonds, 10 percent through tax-saving bonds, over a third through external commercial borrowings, and the remainder through term loans from banks. This strategic approach to debt raising aims to provide the company with the necessary capital to manage its asset portfolio effectively and achieve its goal of being NPA-free by FY 25.

2024-05-02T08:19:26Z dg43tfdfdgfd