Capitaline

Results 14-May-22

Analysis

REC

Asset quality and margin improves, loan growth eases

Rural Electrification Corporation (REC) has reported 11% increase in the net profit to Rs 2287.88 crore for the quarter ended March 2022 (Q4FY2022). The Net Interest Income (NII) rose at healthy pace of 14% to Rs 4227.02 crore, driven by improved Net Interest Margin (NIM). However, the loan book growth moderated on account of high base to 2% end March 2022. The gross profit growth moderated to 6%. Further, the provisions for restructured advances as well as taxes were higher causing moderation in PBT growth in Q4FY2022.

Business highlights:

Outstanding loan portfolio rose 2% to Rs 385371 crore at end March 2022. Disbursements declined 49% yoy to Rs 15486 crore in Q4FY2022, as disbursements in the T&D (including RGGVY) plunged 55% to Rs 8887 crore, while generation segment disbursements declined 43% at Rs 5442 crore. Short-term loans disbursements also fell 19% to Rs 243 crore in Q4FY2022.

Sanctions fell 37% to Rs 10824 crore in Q4FY2022, driven by decline in generation loans sanction by 53% to Rs 2296 crore, while the sanctions to T&D segment also declined 72% to Rs 2869 crore in Q4FY2022.

NIM was up 8 bps yoy to 4.15% in quarter ended March 2022. Yield on loans declined 16 bps yoy to 10.11%, while cost of funds fell 40 bps yoy to 6.67% in Q4FY2022.

Fund raising declined 62% to Rs 11519 crore in the quarter ended March 2022, of which capital gains bonds served Rs 2512 crore, while about Rs 2457 crore were raised through foreign currency borrowings in Q4FY2022. Bank borrowings of Rs 6550 crore were also raised in Q4FY2022.

Outstanding borrowings rose 1% from Rs 326844 crore at end March 2022. Institutional bonds increased declined 15% to Rs 152692 crore, while capital gains, Tax Free & Infra bonds were up 21% to Rs 37251 crore and foreign currency borrowing moved up 39% to Rs 65957 crore at end March 2022.

Total Assets increased by 3% from Rs 410413 crore at end March 2022 up from Rs 400233 crore at end December 2020.

Asset Quality

Gross NPA stood at Rs 17,160 crore at end March 2022, while Net NPAs were Rs 5594 crore at end March 2022. GNPA and NNPA ratio’s stood at 4.45% and 1.45% at end March 2022 compared with 5.07% and 1.74% a quarter ago and 4.84% and 1.71% a year ago.

Book value of the company stood at Rs 255.3 per share at end March 2022, while adjusted Book value (net of NNPA) stood at Rs 227.0 per share at end March 2022.

Quarterly Performance

Income from Operations increased 5% to Rs 9580.1 crore for the quarter ended March 2022. The interest expense declined 2% to Rs 5353.08 crore, pushing up the NII by 14% to Rs 4227.02 crore in quarter ended March 2022. Other income jumped 408% to Rs 21.47 crore. The total income increased 14% to Rs 4248.49 crore in the quarter ended March 2022.

The operating expenses moved up 108% to Rs 655.60 crore, while provisions rose 8% to Rs 754.34 crore in the quarter ended March 2022. The Profit before Tax gained 5% to Rs 2833.12 crore in the quarter ended March 2022. The effective tax rate declined 398 bps yoy to 19.2% . The Net Profit rose 11% to Rs 2287.88 crore in the quarter ended March 2022.

Financial Performance FY2022

For the year ended March 2022 (FY2022), REC reported 11% increase in Income from Operations at Rs 39132.49 crore, while interest expense increased 3% to Rs 22052.91 crore, leading to a 23% rise in NII to Rs 17079.58 crore. Other income moved up 334% to Rs 97.96 crore. The Staff cost moved up 10% to Rs 158.86 crore, while the other expenditure surged 86% to Rs 1102.51 crore. The Depreciation stood at Rs 17.96 crore in FY2022 compared with Rs 9.53 crore in FY2021. Provision for bad debts and standard assets jumped 44% to Rs 3473.31 crore in FY2022. Profit before Tax stood at Rs 12424.90 crore, indicating an increase of 16% on a yoy basis. An effective tax rate stood at 19.1% in FY2022 compared with 22.3% in FY2021. The net profit of the company increased 20% to Rs 10045.92 crore in FY2022.

Rural Electrification Corporation: Results
Particulars	2203 (3)	2103 (3)	Var %	2203 (12)	2103 (12)	Var %
Income from Operations	9580.10	9145.61	5	39132.49	35387.89	11
Interest & Finance Expenses	5353.08	5438.14	-2	22052.91	21489.08	3
NII	4227.02	3707.47	14	17079.58	13898.81	23
Other Income	21.47	4.23	408	97.96	22.55	334
Total Income	4248.49	3711.70	14	17177.54	13921.36	23
Staff Cost	36.07	34.62	4	158.86	144.84	10
Other Expenditure	619.53	281.02	120	1102.51	591.24	86
Gross Profit	3592.89	3396.06	6	15916.17	13185.28	21
Depreciation	5.43	2.65	105	17.96	9.53	88
Provisions and Write-off	754.34	697.64	8	3473.31	2419.62	44
Profit before tax	2833.12	2695.77	5	12424.90	10756.13	16
Tax expense	545.24	626.14	-13	2378.98	2394.35	-1
PAT	2287.88	2069.63	11	10045.92	8361.78	20
EPS	46.3	41.9		50.87	42.34
Adj BV (Rs)	227.0	184.3		227.02	184.34
* Annualized on current equity of Rs 1974.92 crore. Face Value: Rs 10, Figures in Rs crore
Source: Capitaline Corporate Database

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