REC's Profits Surge 71% Year-Over-Year to ₹83.62 Billion in FY 2021

REC Limited has announced the consolidated financial results for the fourth quarter (Q4) and financial year (FY) 2021.

REC’s net profit surged by 71% in FY 2021 to ₹83.62 billion (~$1.15 billion) against ₹48.86 billion (~$673.33 million) last year. In FY 2020, REC had reported a 15.2% fall in its net profit, attributing it to market volatility due to the ongoing coronavirus pandemic.

Meanwhile, REC earned a total income of ₹354.10 billion (~$4.88 billion) in FY 2021, up 19% against ₹298.29 billion (4.11 billion) in FY 2020.

REC is an infrastructure finance company involved in financing power projects in the complete. The company also provides financial assistance to state power generators, state governments, state-owned and private power distribution companies, independent power producers, rural electric co-operatives, and private power generators.

REC approved loans to the tune of ₹1.54 trillion (~$21.22 billion) in FY 2021, up 40% against ₹1.1 trillion (~$15.16 billion) in FY 2020. The company disbursed ₹929.87 billion (~$12.81 billion) in FY 2021, up 23% against ₹756.67 billion (~$10.42 billion) in FY 2020.

With healthy operational performance during the quarter, REC has clocked a quarterly profit of ₹20.7 billion (~$284.99 million) during Q4 FY21, as against ₹4.36 billion (~$60.02 million) during the fourth quarter of FY20. As a result, the non-annualized earnings per share for the quarter ended March 31, 2021, was ₹10.48 (~$0.14) as against ₹2.21 (~$0.030)/ share during the same quarter last year.

REC earned a net profit of ₹22.6 billion (~$310.9 million) in the third quarter of FY 2021, an increase of 38% over the net profit in the same quarter the previous year. The Q3 FY 2021 profit was the company’s highest-ever recorded for a quarter.

REC’s loan book has grown from ₹3.2 trillion (~$44.05 billion) on March 31, 2020 to ₹3.77 trillion (~$51.9 billion) as of March 31, 2021. The rising profits have pushed REC’s net worth to ₹434.26 billion (~$5.98 billion), with the book value at ₹220 (~$3.03)/ per share as of March 31, 2021.

The company’s capital adequacy ratio has also improved sequentially to 19.72% as of March 31, 2021, which is expected to aid the company’s growth further.

With a sustained trend of improving asset quality, the net credit-impaired assets have reduced to 1.71% as of March 31, 2021, as against 3.32% as of March 31, 2020. The provisioning coverage ratio of the company has also improved to 64.59% as of March 31, 2021, compared to 49.65% during the same time the year before. Provisioning Coverage Ratio is the ratio of making provisions for non-performing assets and indicates the extent of funds a bank has kept aside to cover loan losses.

In February, REC raised $500 million through a bond issue under its $7 billion Global Medium Term Notes program.  The proceeds from the sale of notes will be used for lending to the power sector.