Capitaline

Results 30-Oct-21

Analysis

REC

Asset quality improves, disbursements and loan growth ease on high base

Rural Electrification Corporation (REC) has reported 25% increase in the net profit to Rs 2738.79 crore for the quarter ended September 2021 (Q2FY2022). The Net Interest Income (NII) surged 33% to Rs 4476.59 crore. The loan book growth was in double digit at 11% end September 2021. The gross profit increased 26%.

Income from Operations increased 14% to Rs 10039.14 crore for the quarter ended September 2021. The interest expense moved up 3% to Rs 5562.55 crore, pushing up the NII by 33% to Rs 4476.59 crore in quarter ended September 2021. Other income jumped 228% to Rs 39.68 crore. The total income increased 34% to Rs 4516.27 crore in the quarter ended September 2021.

The operating expenses were Rs 11.09 crore, while provisions jumped 41% to Rs 1118.51 crore in the quarter ended September 2021. The Profit before Tax rose 22% to Rs 3382.02 crore in the quarter ended September 2021. The effective tax rate declined 200 bps yoy to 19.0%. The Net Profit rose 25% to Rs 2738.79 crore in the quarter ended September 2021.

Business highlights:

Outstanding loan portfolio increased 11% to Rs 387277 crore at end September 2021. Disbursements declined 25% yoy to Rs 21730 crore in Q2FY2022, as disbursements in the T&D (including RGGVY) declined 19% to Rs 16592 crore, while generation segment disbursements dipped 38% at Rs 4199 crore. However, short-term loans disbursements zoomed 291% to Rs 450 crore in Q2FY2022.

The disbursements and loan growth of the company has eased in Q2FY2022 over Q2FY2021 on account of disbursements of loans to discoms under liquidity infusion scheme of the government.

Sanctions declined 75% to Rs 17198 crore in Q2FY2022, driven by decline in generation loans sanction by 35% to Rs 3185 crore, while the sanctions to T&D segment also dipped 88% to Rs 6899 crore in Q2FY2022.

With the decline in cost of funds, NIM moved up 28 bps qoq and 31 bps yoy to 4.50% in quarter ended September 2021. Yield on loans declined 40 bps yoy to 10.59%, while cost of funds fell 44 bps yoy to 6.73% in Q2FY2022.

Fund raising declined 26% to Rs 13503 crore in the quarter ended September 2021, of which Capital gains bonds served Rs 1816 crore, while about Rs 7437 crore were raised through foreign currency borrowings in Q2FY2022.

Outstanding borrowings increased by 11% from Rs 332693 crore at end September 2021. Institutional bonds increased 4% to Rs 172618 crore, capital gains, Tax Free & Infra bonds were up 1% to Rs 33884 crore and foreign currency borrowing moved up 13% to Rs 55758 crore at end September 2021.

Total Assets increased by 12% from Rs 414294 crore at end September 2021 up from Rs 371029 crore at end September 2020.

Asset Quality

Gross NPA stood at Rs 18,211 crore at end September 2021, while Net NPAs were Rs 5895 crore at end September 2021. GNPA and NNPA ratio’s stood at 4.70% and 1.52% at end September 2021 compared with 4.80% and 1.61% a quarter ago and 5.22% and 2.04% at end September 2020.

Book value of the company stood at Rs 239.0 per share at end September 2021, while adjusted Book value (factoring in NNPA) stood at Rs 209.2 per share at end September 2021.

Financial Performance H1FY2022

For the half year ended September 2021 (H1FY2022), REC reported 14% increase in Income from Operations at Rs 19545.5 crore, while interest expense increased 5% to Rs 11151.11 crore, leading to a 27% rise in NII to Rs 8394.39 crore. Other income moved up 231% to Rs 44.44 crore. The Staff cost moved up 21% to Rs 81.88 crore, while the other expenditure rose 5% to Rs 309.46 crore. The depreciation stood at Rs 7.46 crore in H1FY2022 compared with Rs 4.64 crore in H1FY2021. Provision for bad debts and standard assets jumped 92% to Rs 1899.95 crore in H1FY2022. Profit before Tax stood at Rs 6140.08 crore, indicating an increase of 17% on a yoy basis. An effective tax rate stood at 22.3% in H1FY2022 compared with 30.0% in H1FY2021. The net profit of the company increased 24% to Rs 4985.39 crore in H1FY2022.

Rural Electrification Corporation: Results
Particulars	2109 (3)	2009 (3)	Var %	2109 (6)	2009 (6)	Var %	2103 (12)	2003 (12)	Var %
Income from Operations	10039.14	8779.38	14	19545.50	17200.15	14	35387.89	29765.21	19
Interest & Finance Expenses	5562.55	5411.96	3	11151.11	10604.97	5	21489.08	18997.05	13
NII	4476.59	3367.42	33	8394.39	6595.18	27	13898.81	10768.16	29
Other Income	39.68	12.08	228	44.44	13.43	231	22.55	63.92	-65
Total Income	4516.27	3379.50	34	8438.83	6608.61	28	13921.36	10832.08	29
Staff Cost	42.52	36.84	15	81.88	67.58	21	144.84	175.79	-18
Other Expenditure	-31.43	-226.25	-86	309.46	294.06	5	591.24	2773.44	-79
Gross Profit	4505.18	3568.91	26	8047.49	6246.97	29	13185.28	7882.85	67
Depreciation	4.65	2.26	106	7.46	4.64	61	9.53	10.00	-5
Provisions and Write-off	1118.51	793.40	41	1899.95	992.02	92	2419.62	889.56	172
Profit before tax	3382.02	2773.25	22	6140.08	5250.31	17	10756.13	6983.29	54
Tax expense	643.23	583.05	10	1154.69	1221.09	-5	2394.35	2097.13	14
PAT	2738.79	2190.20	25	4985.39	4029.22	24	8361.78	4886.16	71
EPS	55.5	44.4		50.5	40.8		42.34	24.74
* 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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