The loan book growth was strong at 16% end September 2020. The gross profit of the company has surged 67%. Further, the provisions have surged, but the effective tax rate dipped boosting net profit growth in Q2FY2021.

Business highlights:

Outstanding loan portfolio continues rise at a strong pace of 16% to Rs 348951 crore at end September 2020. Disbursements surged 60% yoy to Rs 28826 crore in Q2FY2021, as disbursements in the T&D (including RGGVY) jumped 86% to Rs 20452 crore, while generation segment disbursements also surged 80% at Rs 6721 crore. However, short-term loans disbursements dipped 84% to Rs 115 crore in Q2FY2021.

Sanctions zoomed 65% to Rs 67961 crore in Q2FY2021, driven by surge in the sanctions to T&D segment by 493% to Rs 56513 crore in Q2FY2021, while generation loans sanction dipped 83% to Rs 4931 crore.

With the higher yield on loans, NIM surged 51 bps qoq and 33 bps yoy to 4.19% in quarter ended September 2020. Yield on loans moved up 25 bps yoy to 11.03%, while cost of funds fell 22 bps yoy to 7.26% in Q2FY2021.

Fund raising declined 13% to Rs 18329 crore in the quarter ended September 2020, of which Rs 8964 crore raised through institutional bonds. Capital gains bonds served Rs 977 crore, while about Rs 788 crore were raised through foreign currency borrowings in Q2FY2021.

Outstanding borrowings increased by 16% from Rs 298991 crore at end September 2020. Institutional bonds increased 14% to Rs 166748 crore, capital gains and foreign currency borrowing moved up 34% to Rs 49136 crore, while tax Free & Infra bonds declined 7% to Rs 33491 crore at end September 2020.

Total Assets increased by 16% from Rs 371029 crore at end September 2020 up from Rs 319575 crore at end September 2019.

Asset Quality

Gross NPA stood at Rs 18,221 crore at end September 2020, while Net NPAs were Rs 7118 crore at end September 2020. GNPA and NNPA ratio's stood at 5.22% and 2.04% at end September 2020 compared with 6.11% and 2.88% a quarter ago and 6.86% and 3.47% at end September 2019.

Book value of the company stood at Rs 203.9 per share at end September 2020, while adjusted Book value (factoring in NNPA and 25% of restructured advances) stood at Rs 167.8 per share at end September 2020.

Quarterly Performance

Income from Operations increased 16% to Rs 8779.38 crore for the quarter ended September 2020. The interest expense moved up 15% to Rs 5411.96 crore, pushing up the NII by 17% to Rs 3367.42 crore in quarter ended September 2020. Other income moved up 254% to Rs 12.08 crore. The total income increased 17% to Rs 3379.50 crore in the quarter ended September 2020.

The operating expenses were negative at Rs 189.41 crore, while provisions jumped 164% to Rs 793.40 crore in the quarter ended September 2020. The Profit before Tax rose 51% to Rs 2773.25 crore in the quarter ended September 2020. The effective tax rate declined 795 bps yoy to 21.0%. The Net Profit rose 68% to Rs 2190.20 crore in the quarter ended September 2020.

Financial Performance H1FY2021

For the half year ended March 2020 (H1FY2021), REC reported 20% increase in income from operations at Rs 17200.15 crore, while interest expense increased 14% to Rs 10604.97 crore, leading to a 29% rise in NII to Rs 6595.18 crore. Other income moved up 110% to Rs 13.43 crore. The staff cost declined 28% to Rs 67.58 crore, while the other expenditure dipped 63% to Rs 294.06 crore. The depreciation stood at Rs 4.64 crore in H1FY2021 compared with Rs 4.56 crore in H1FY2020. Provision for bad debts and standard assets jumped 264% to Rs 992.02 crore in H1FY2021. Profit before Tax stood at Rs 5250.31 crore, indicating an increase of 33% on a yoy basis. An effective tax rate stood at 23.3% in H1FY2021 compared with 28.8% in H1FY2020. The net profit of the company increased 43% to Rs 4029.22 crore in H1FY2021.