| Rural Electrification Corporation (REC) has reported 25% increase in the net profit to Rs 1764.33 crore for the quarter ended September 2018 (Q2FY2019). The Net Interest Income (NII) rebounded 4% in Q2FY2019, while snapping 10% decline in the previous quarter. The overall income from operations surged 30% with strong growth on non-interest income. The company has exhibited acceleration in the loan book growth to 19% end September 2018. The company has maintained stable asset quality in the quarter ended September 2018.
Business highlights:
Outstanding loan portfolio surged 19% to Rs 256968 crore at end September 2018. Disbursements galloped 76% yoy to Rs 24226 crore in Q2FY2019, as disbursements in the T&D (including RGGVY) jumped 65% to Rs 10783 crore, while generation segment disbursements zoomed 177% at Rs 8809 crore. The company also posted 47% surge in renewable energy segment disbarments to Rs 2634 crore. However, the short-term loans disbursements fell 11% to Rs 2000 crore in Q2FY2019.
Sanctions zoomed 120% to Rs 49003 crore in Q2FY2019, driven by surge in generation loans sanction by 209% to Rs 18642 crore, while the sanctions to T&D segment also jumped 134% to Rs 25370 crore in Q2FY2019. The sanction in the renewable energy segment increased 11% to Rs 2341 crore, while short term loan sanctions declined 20% to Rs 2650 crore in Q2FY2019.
The company exhibited healthy improvement in interest spreads to 3.39% and net interest margin to 4.01% on sequential basis in Q2FY2019. Yield on loans improved 35 bps qoq to 10.67%, while cost of funds rose mere 1 bps qoq to 7.28% in Q2FY2019.
Fund raising declined 2% to Rs 12841 crore in the quarter ended September 2018, of which Rs 5000 crore raised through institutional bonds. Capital gains bonds served Rs 1677 crore, while about Rs 3864 crore were raised through foreign currency borrowings in Q2FY2019.
Outstanding borrowings increased by 23% from Rs 215603 crore at end September 2018. Institutional bonds increased 16% to Rs 129188 crore, capital gains, Tax Free & Infra bonds were up 10% to Rs 36711 crore and foreign currency borrowing moved up 21% to Rs 30123 crore at end September 2018.
Total Assets of the company stood at Rs 266102 crore at end September 2018.
Asset Quality
The gross stage 3 assets of the company stood at Rs 20355 crore at end September 2018. The gross stage 3 assets ratio has declined to 7.92% end September 2018 from 8.12% end June 2018. The net stage 3 assets ratio was steady at 4.28% September 2018 compared with 4.27% end June 2018.
Book value of the company stood at Rs 165.9 per share at end September 2018, while adjusted Book value (factoring in net stage 3 advances) stood at Rs 110.1 per share at end September 2018.
Quarterly Performance
Income from Operations increased 30% to Rs 7286.17 crore for the quarter ended September 2018. The interest expense moved up 16% to Rs 3778.93 crore in quarter ended September 2018. Other income jumped 900% to Rs 13.00 crore.
The operating expenses moved up 178% to Rs 993.20 crore in the quarter ended September 2018. The Profit before Tax improved 27% to Rs 2525.45 crore in the quarter ended September 2018. The effective tax rate increased 73 bps yoy to 30.1%. The net profit moved up 25% to Rs 1764.33 crore in the quarter ended September 2018.
Half Yearly Financial Performance
For the half year ended September 2018 (H1FY2019), REC reported 21% increase in Income from Operations at Rs 13603.64 crore, while interest expense increased 15% to Rs 7398.76 crore. Other income moved up 491% to Rs 14.54 crore. The staff cost declined 22% to Rs 69.91 crore, while the other expenditure increased 15% to Rs 1510.04 crore. The Depreciation stood at Rs 3.18 crore in H1FY2019 compared with Rs 2.61 crore in H1FY2018. Profit before Tax stood at Rs 4636.29 crore, indicating an increase of 37% on a yoy basis. The Tax expense during the period under review stood at Rs 1403.26 crore, resulting in a PAT of Rs 3233.03 crore in H1FY2019, showing a growth of 30% over H1FY2018. |