REC Ltd Achieves Record High Stock Price After Reporting Highest Quarterly Profit

REC Ltd Achieves Record High Stock Price After Reporting Highest Quarterly Profit

VoM News Desk | November 2, 2023 | 02:41 PM IST | Breaking News | Follow on Google News

REC Ltd Achieves Record High Stock Price After Reporting Highest Quarterly Profit

REC Ltd Achieves Record High Stock Price After Reporting Highest Quarterly Profit

REC Ltd, a state-owned power sector financing company, reached a record high stock price in intra-day trading following the release of its highest-ever quarterly profit for Q2FY24 (September quarter of FY24). The company reported a significant 38.71% year-on-year increase in its consolidated net profit for the quarter, amounting to ₹3,789.90 crore, compared to ₹2,732.12 crore in the previous year.

Factors Driving the Record Profit

REC attributed its record profit to several key factors, including:

• Improving asset quality
• Increased lending rates
• Effective management of finance costs

These factors contributed to REC’s ability to achieve its highest-ever quarterly profit.

Impressive Stock Performance

As a result of the positive financial results and market sentiment, REC’s stock price surged by as much as 8.6% to reach a new record high of ₹307.35 in intra-day trading. The stock has demonstrated remarkable growth, rallying over 213% from its 52-week low of ₹98.10, which was recorded on November 10, 2022.

The stock has delivered multibagger returns over the past year and in the year-to-date (YTD) period. It has risen by 174% in the last 12 months and by 164% in 2023 YTD. REC’s stock has posted positive returns in 9 of the 10 months of the year, with a negative performance observed only in February, when it was down by 6.12%. The stock witnessed a consistent upward trend from March 2023, posting a significant gain of almost 152% between March and October.

Strong Lending Activities

During the period under review, REC sanctioned loans worth ₹1.04 lakh crore, a notable increase from ₹84,889 crore sanctioned in the previous year. Loans for renewable energy projects represented 24% of the total sanctions. The company’s loan book also grew by 20%, reaching ₹4.74 lakh crore compared to ₹3.94 lakh crore in the same period of the previous year.

Improvements in Asset Quality and Capital Adequacy

REC highlighted improving asset quality, with net credit-impaired assets reducing to 0.96% and a provision coverage ratio of 69.37% on non-performing assets as of September 30, 2023. The capital adequacy ratio (CRAR) of the company, which predominantly lends to the power sector, stood at a comfortable 28.53% at the end of September.

Diversification into Infrastructure and Logistics Sector

REC has significantly expanded into the infrastructure and logistics sector since becoming a Maharatna company in September 2022. The company’s business activities involve financing projects throughout the complete power sector value chain, including generation, transmission, and distribution.

Interim Dividend

The board of directors of REC has approved an interim dividend of ₹3.50 per equity share of ₹10 each for FY24.

REC provides financial assistance to a wide range of entities in the power sector, including state electricity boards, state governments, central/state power utilities, independent power producers, rural electric cooperatives, and private sector utilities, through its extensive network of 22 offices nationwide.

Disclaimer: The opinions and suggestions provided in this article are those of individual analysts and do not reflect the viewpoints of VoM News. We encourage investors to consult with certified experts before making any investment choices.

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