Capitaline

Results 06-Aug-21

Analysis

REC

Stable asset quality with healthy loan growth at 15%

Rural Electrification Corporation (REC) has reported 22% increase in the net profit to Rs 2246.60 crore for the quarter ended June 2021 (Q1FY2022). The Net Interest Income (NII) increased at strong pace of 21% to Rs 3917.80 crore, driven by surge in Net Interest Margin (NIM).

The loan book growth was strong at 15% end June 2021. The gross profit galloped 32%, driven by 34% dip in other expenditure. However, the provisions zoomed nearly four times in Q1FY2022. Still PBT increased 11% in Q1FY2022.

Quarterly Performance

Income from Operations increased 13% to Rs 9506.36 crore for the quarter ended June 2021. The interest expense moved up 8% to Rs 5588.56 crore, pushing up the NII by 21% to Rs 3917.8 crore in quarter ended June 2021. Other income jumped 253% to Rs 4.76 crore. The total income increased 21% to Rs 3922.56 crore in the quarter ended June 2021.

The operating expenses dipped 31% to Rs 380.25 crore, while provisions jumped 293% to Rs 781.44 crore in the quarter ended June 2021. The Profit before Tax rose 11% to Rs 2758.06 crore in the quarter ended June 2021. The effective tax rate declined 721 bps yoy to 18.5%. The Net Profit rose 22% to Rs 2246.60 crore in the quarter ended June 2021.

Business highlights:

Outstanding loan portfolio continues rise at a strong pace of 15% to Rs 379390 crore at end June 2021. Disbursements declined 1% yoy to Rs 15095 crore in Q1FY2022, as disbursements in the T&D (including RGGVY) declined 22% to Rs 7197 crore, while generation segment disbursements also fell 25% at Rs 3762 crore. However, short-term loans disbursements zoomed 649% to Rs 3185 crore in Q1FY2022.

Sanctions dipped 59% to Rs 17274 crore in Q1FY2022, driven by plunge in generation loans sanction by 72% to Rs 5061 crore, while the sanctions to T&D segment also fell 41% to Rs 9402 crore in Q1FY2022.

Yield on loans rose 7 bps yoy to 10.60%, while cost of funds fell 30 bps yoy to 6.89% in Q1FY2022. With the decline in cost of funds, NIM improved 43 bps qoq and 54 bps yoy to 4.22% in quarter ended June 2021.

Fund raising declined 58% to Rs 10219 crore in the quarter ended June 2021, of which Rs 4000 crore raised through institutional bonds. Capital gains bonds served Rs 1288 crore, while about Rs 431 crore were raised through foreign currency borrowings in Q1FY2022. Bank borrowings contributed Rs 4500 crore in Q1FY2022.

Outstanding borrowings increased by 10% from Rs 326723 crore at end June 2021. Institutional bonds increased 6% to Rs 178814 crore, capital gains, Tax Free & Infra bonds fell 7% to Rs 32062 crore and foreign currency borrowing also declined 6% to Rs 48434 crore at end June 2021.

Total Assets increased by 11% from Rs 406223 crore at end June 2021 up from Rs 365595 crore at end June 2020.

Asset Quality Gross NPA stood at Rs 18,211 crore at end June 2021, while Net NPAs were Rs 6105 crore at end June 2021.

GNPA and NNPA ratio’s stood at 4.80% and 1.61% at end June 2021 compared with 4.84% and 1.71% a quarter ago and 6.11% and 2.88% at end June 2020.

Book value of the company stood at Rs 228.5 per share at end June 2021, while adjusted Book value (net of NNPA) stood at Rs 197.6 per share at end June 2021.

Financial Performance FY2021

For the year ended March 2020 (FY2021), REC reported 19% increase in Income from Operations at Rs 35387.89 crore, while interest expense increased 13% to Rs 21489.08 crore, leading to a 29% rise in NII to Rs 13898.81 crore. Other income declined 65% to Rs 22.55 crore. The Staff cost dipped 18% to Rs 144.84 crore, while the other expenditure plunged 79% to Rs 591.24 crore. The depreciation stood at Rs 9.53 crore in FY2021 compared with Rs 10.00 crore in FY2020. Provision for bad debts and standard assets jumped 172% to Rs 2419.62 crore in FY2021. Profit before Tax stood at Rs 10756.13 crore, indicating an increase of 54% on a yoy basis. An effective tax rate stood at 22.3% in FY2021 compared with 30.0% in FY2020. The net profit of the company increased 71% to Rs 8361.78 crore in FY2021

Rural Electrification Corporation: Results
Particulars	2106 (3)	2006 (3)	Var %	2103 (12)	2003 (12)	Var %
Income from Operations	9506.36	8420.77	13	35387.89	29765.21	19
Interest & Finance Expenses	5588.56	5193.02	8	21489.08	18997.05	13
NII	3917.80	3227.75	21	13898.81	10768.16	29
Other Income	4.76	1.35	253	22.55	63.92	-65
Total Income	3922.56	3229.10	21	13921.36	10832.08	29
Staff Cost	39.36	30.74	28	144.84	175.79	-18
Other Expenditure	340.89	520.31	-34	591.24	2773.44	-79
Gross Profit	3542.31	2678.05	32	13185.28	7882.85	67
Depreciation	2.81	2.38	18	9.53	10.00	-5
Provisions and Write-off	781.44	198.62	293	2419.62	889.56	172
Profit before tax	2758.06	2477.05	11	10756.13	6983.29	54
Tax expense	511.46	638.04	-20	2394.35	2097.13	14
PAT	2246.60	1839.01	22	8361.78	4886.16	71
EPS	45.5	37.2		42.3	24.7
* 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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( Corporate News - 06-Aug-21 12:19 )