Business highlights:

Outstanding loan portfolio continues rise at a strong pace of 17% to Rs 300716 crore at end September 2019. Disbursements declined 26% yoy to Rs 17981 crore in Q2FY2020, as disbursements in the generation segment declined 58% at Rs 3737 crore, while short-term loans disbursements also fell 63% to Rs 740 crore in Q2FY2020. However, T&D (including RGGVY) disbursements rose 2% to Rs 11021 crore.

Sanctions fell 16% to Rs 41300 crore in Q2FY2020, driven by 62% decline in the sanctions to T&D segment to Rs 9526 crore, while generation loans sanctions surged by 53% to Rs 28442 crore in Q2FY2020.

With the rise in yield on loans and decline in cost of funds, NIM rose 27 bps qoq to 3.86% in quarter ended September 2019. Yield on loans improved 24 bps qoq to 10.78%, while cost of funds fell 4 bps qoq to 7.48% in Q2FY2020.

Fund raising jumped 65% to Rs 21145 crore in the quarter ended September 2019, of which Rs 9581 crore raised through institutional bonds. Capital gains bonds served Rs 1592 crore, while about Rs 6722 crore were raised through foreign currency borrowings in Q2FY2020. Bank borrowings stood at Rs 3250 crore in Q2FY2020.

Outstanding borrowings increased by 19% from Rs 257412 crore at end September 2019. Institutional bonds increased 13% to Rs 145672 crore, capital gains, Tax Free & Infra bonds were down 2% to Rs 35930 crore and foreign currency borrowing moved up 22% to Rs 36603 crore at end September 2019.

Total Assets increased by 20% to Rs 319575 crore at end September 2019 up from Rs 266102 crore at end September 2018.

Asset Quality

Gross NPA stood at Rs 20,636 crore at end September 2019, while Net NPAs were Rs 10442 crore at end September 2019. GNPA and NNPA ratio's stood at 6.86% and 3.47% at end September 2019 compared with 7.18% and 3.72% a quarter ago and 7.92% and 4.28% at end September 2018.

Book value of the company stood at Rs 186.5 per share at end September 2019, while adjusted Book value (net of NNPA) stood at Rs 133.6 per share at end September 2019.

Quarterly Performance

Income from Operations increased 19% to Rs 7422.63 crore for the quarter ended September 2019. The interest expense moved up 25% to Rs 4714.73 crore, pushing up the NII by 10% to Rs 2707.9 crore in quarter ended September 2019. Other income dipped 78% to Rs 2.64 crore. The total income increased 10% to Rs 2710.54 crore in the quarter ended September 2019.

The operating expenses increased to Rs 568.02 crore, while provisions jumped 370% to Rs 300.27 crore in the quarter ended September 2019. The Profit before Tax declined 27% to Rs 1839.78 crore in the quarter ended September 2019. The effective tax rate declined 116 bps yoy to 29.0%. The Net Profit fell 26% to Rs 1306.76 crore in the quarter ended September 2019.

Financial Performance H1FY2020

For the half year ended September 2019 (H1FY2020), REC reported 20% increase in Income from Operations at Rs 14408.82 crore, while interest expense increased 26% to Rs 9287.3 crore, leading to a 12% rise in NII to Rs 5121.52 crore. Other income declined 59% to Rs 5.64 crore. The Staff cost moved up 35% to Rs 93.96 crore, while the other expenditure surged to Rs 814.09 crore. The Depreciation stood at Rs 4.56 crore in H1FY2020 compared with Rs 3.18 crore in H1FY2019, while provision for bad debts and standard assets jumped 39% to Rs 272.77 crore in H1FY2020. Profit before Tax stood at Rs 3941.78 crore, indicating a decline of 15% on a yoy basis. An effective tax rate stood at 28.8% in H1FY2020 compared with 24.9% in H1FY2019. The net profit of the company declined 13% to Rs 2808.10 crore in H1FY2020.