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    REC Ltd

    RECLTDNeutral
    Financial Services·10 Feb 2025
    Management Summary

    REC Limited demonstrated strong operational performance in Q3 FY25 with record disbursements and steady growth across key metrics. The company is on track for significant provision reversals from asset resolutions and maintains confidence in achieving 15-17% loan growth going forward.

    Highlights

    7

    • Highest ever 9-month disbursements of Rs. 1,45,647 crores (19% YoY growth)

    • 9-month net profit of Rs. 11,477 crores (15% YoY growth)

    • Loan book reached Rs. 5.66 lakh crores (14% YoY growth)

    • Net NPA improved to 0.74% from 0.82%

    • Expected provision reversals of Rs. 2,200 crores from 4 operating asset resolutions

    • Third interim dividend of Rs. 4.30 per share declared

    • Renewable energy disbursements grew 79% in 9 months

    What Changed2

    vs Q3 FY25

    Tone shiftConfident but cautious → confident and optimisticRisks discussed4 → 3 (-1)
    Key financials

    Metrics

    6

    Periods

    3

    Headline

    1
    • Loan Book
      ₹5.66L Cr
      YoY+14.0%

    Q3

    1
    • PAT
      ₹4,029 Cr
      YoY+23%

    9M

    4
    • Net Profit
      ₹11,477 Cr
      YoY+15%
    • Total Income
      ₹40,805 Cr
      YoY+18%
    • Net Interest Income
      ₹14,191 Cr
      YoY+24%
    • Disbursements
      ₹1.46L Cr
      YoY+19%

    Guidance & targets

    4
    CategoryTargetPriority
    Loan Growth
    Asset growth
    15% to 17%
    		High
    Long-term Target
    Asset Under Management
    Rs. 10 lakh crores
    		High
    Margins
    NIMs
    More than 3.65% to about 3.7%
    		High
    Asset Quality
    Provision reversals
    Rs. 2,200 crores
    		High

    Risks & concerns

    3
    RiskSeverity

    PPA signing delays affecting RE growth

    Delays in PPA signing by SECI, NTPC, NHPC affecting project funding timelines but not increasing risks — Other acknowledged

    medium

    Forex exposure due to rupee depreciation

    Foreign loan outstanding of Rs. 1,59,000 crores with 99% hedging coverage — Other acknowledged

    low

    Thermal project pricing pressure

    Some state utilities seeking aggressive pricing for thermal projects but management sees this as isolated cases — Other acknowledged

    medium

    Q&A highlights

    3

    “A lot of repayments have happened in respect of revolving bill payment facility... some renewable energy projects, some prepayments have happened because you know the nature of renewable energy projects”

    Explains elevated repayment rates and confirms RBPF scheme as major contributor to distribution sector prepayments

    asked by Shreya Shivani from CLSA

    1 min read4 chapters

    Detailed Narrative

    01

    Strong Operational Performance

    REC delivered exceptional 9-month performance with highest ever disbursements of Rs. 1,45,647 crores (19% YoY growth) and net profit of Rs. 11,477 crores (15% YoY growth). The loan book reached Rs. 5.66 lakh crores with 14% growth. Renewable energy disbursements surged 79% demonstrating strong execution in clean energy transition.

    02

    Asset Quality Improvement and Resolution Pipeline

    Net NPA improved to 0.74% from 0.82% with gross NPA at 1.95%. Management expects Rs. 2,200 crores in provision reversals from 4 operating asset resolutions including KSK Mahanadi (Rs. 908 cr), Sinnar Thermal (Rs. 761 cr), Hiranmaye (Rs. 440 cr), and Bhadreshwar (Rs. 43 cr). NCLT approvals pending but recovery prospects strong.

    03

    Growth Strategy and Market Position

    Management targets 15-17% loan growth for Q4 and beyond, aiming for Rs. 10 lakh crores AUM by 2030. Strong pipeline in renewable energy, thermal generation (80-94 GW opportunity), and infrastructure sectors. RDSS and rooftop solar programs gaining momentum as implementing agency.

    04

    Dividend Policy and Financial Strength

    Declared third interim dividend of Rs. 4.30/share, bringing total interim dividend to Rs. 11.80/share. Capital adequacy ratio at comfortable 25.33% vs 15% requirement. NIMs improved to 3.64% with guidance to maintain 3.65-3.7% going forward⏳.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.