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Results
05-Aug-22
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Analysis
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REC
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Sanctions in Q1FY2023 crosses full year FY2022 sanctions, stable asset quality and margins
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REC has reported 9% increase in the net profit to Rs 2447.26 crore
for the quarter ended June 2022 (Q1FY2023). The Net Interest Income (NII) rose
at moderate pace of 4% to Rs 4083.21 crore, driven by flat Net Interest Margin
(NIM) and moderate loan growth.
The loan book of the company
rose at moderate pace of 2% end June 2022. The gross profit declined 3%. However,
the provisions have declined and effective tax rate eased supporting 9% growth
in the net profit in Q1FY2023.
Business highlights:
Outstanding
loan portfolio rose 2% to Rs 387888 crore at end June 2022. Disbursements declined
18% yoy to Rs 12442 crore in Q1FY2023, as disbursements in the T&D
(including RGGVY) dipped 59% to Rs 2916 crore, while generation segment
disbursements also fell 46% at Rs 2033 crore. Further, short-term loans
disbursements also declined 51% to Rs 1562 crore in Q1FY2023. However, the renewable
energy segment disbursements have jumped 524% to Rs 5931 crore in Q1FY2022.
Sanctions
zoomed 247% to Rs 59895 crore in Q1FY2023, driven by surge in generation loans
sanction by 605% to Rs 35662 crore renewable energy 252% to Rs 9885 crore and short
term loans to Rs 5350 crore, while the sanctions to T&D segment also fell 4%
to Rs 8998 crore in Q1FY2023. The sanctions in Q1FY2023 have crossed the sanctions
of Rs 54421 crore achieved in last full financial year FY2022.
With the
decline in yield on loans, NIM declined 6 bps qoq and 1 bps yoy to 4.09% in
quarter ended June 2022. Yield on loans declined 30 bps yoy to 10.07%, while
cost of funds also fell 26 bps yoy to 6.73% in Q1FY2023.
Fund
raising declined 45% to Rs 5598 crore in the quarter ended June 2022, of which capital
gains bonds served Rs 2670 crore and banks Rs 2150 crore, while about Rs 778 crore
were raised through foreign currency borrowings in Q1FY2023.
Outstanding
borrowings rose by 1% from Rs 329906 crore at end June 2022. Institutional
bonds declined 18% to Rs 146814 crore, while capital gains, Tax Free &
Infra bonds were up 25% to Rs 39920 crore and foreign currency borrowing moved
up 42% to Rs 68909 crore at end June 2022.
Total
Assets increased by 2% from Rs 413667 crore at end June 2022 up from Rs 406223 crore
at end June 2021.
Asset Quality
Gross NPA
stood at Rs 17,125 crore at end June 2022, while Net NPAs were Rs 5466 crore at
end June 2022. GNPA and NNPA ratio’s stood at 4.41% and 1.41% at end June 2022 compared
with 4.45% and 1.45% a quarter ago and 4.80% and 1.61% at end June 2021.
Book value of the company stood at
Rs 263.5 per share at end June 2022, while adjusted Book value (factoring in
NNPA) stood at Rs 235.8 per share at end June 2022.
Quarterly
Performance
Income
from Operations was flat at Rs 9459.9 crore for the quarter ended June 2022. The
interest expense declined 4% to Rs 5376.69 crore, pushing up the NII by 4% to
Rs 4083.21 crore in quarter ended June 2022. Other income jumped 81% to Rs 8.61
crore. The total income increased 4% to Rs 4091.82 crore in the quarter ended
June 2022.
The
operating expenses moved up 69% to Rs 641.88 crore, while provisions declined 35%
to Rs 504.50 crore in the quarter ended June 2022. The Profit before Tax rose 7%
to Rs 2939.55 crore in the quarter ended June 2022. The effective tax rate declined
180 bps yoy to 16.7%. The Net Profit rose 9% to Rs 2447.26 crore in the quarter
ended June 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.
REC:
Results
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Particulars
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2206 (3)
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2106 (3)
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Var %
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2203 (12)
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2103 (12)
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Var %
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Income
from Operations
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9459.90
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9506.36
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0
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39132.49
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35387.89
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11
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Interest
& Finance Expenses
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5376.69
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5588.56
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-4
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22052.91
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21489.08
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3
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NII
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4083.21
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3917.80
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4
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17079.58
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13898.81
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23
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Other
Income
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8.61
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4.76
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81
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97.96
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22.55
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334
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Total
Income
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4091.82
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3922.56
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4
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17177.54
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13921.36
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23
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Staff
Cost
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75.41
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39.36
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92
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158.86
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144.84
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10
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Other
Expenditure
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566.47
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340.89
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66
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1102.51
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591.24
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86
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Gross
Profit
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3449.94
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3542.31
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-3
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15916.17
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13185.28
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21
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Depreciation
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5.89
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2.81
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110
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17.96
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9.53
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88
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Provisions
and Write-off
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504.50
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781.44
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-35
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3473.31
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2419.62
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44
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Profit
before tax
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2939.55
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2758.06
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7
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12424.90
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10756.13
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16
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Tax
expense
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492.29
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511.46
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-4
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2378.98
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2394.35
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-1
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PAT
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2447.26
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2246.60
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9
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10045.92
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8361.78
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20
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EPS
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49.6
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45.5
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50.87
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42.34
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Adj
BV (Rs)
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235.8
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197.6
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227.02
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184.34
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*
Annualized on current equity of Rs 1974.92 crore. Face Value: Rs 10, Figures
in Rs crore
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Source:
Capitaline Corporate Database
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