REC reports strong Q1 results with 21% rise in net profit to ₹2,968 cr

REC (formerly known as Rural Electrification Corporation) released its financial results for the first quarter of fiscal year 2023-24 (Q1FY24) on July 26. The company reported a significant growth of 21 per cent in its consolidated net profit, which reached ₹2,968.05 crore compared to ₹2,454.16 crore during the same period last year.

This increase in profitability was accompanied by a rise of 16.7 per cent in revenue from operations, amounting to ₹11,087.56 crore in Q1FY24, compared to ₹9,497.45 crore in the corresponding period last year.

In light of the positive financial performance, REC’s board declared an interim dividend of ₹3 per equity share of ₹10 each for fiscal year 2023-24. The record date for the dividend was set as August 14, 2023, and the dividend is expected to be paid or dispatched on or before August 24, 2023, to shareholders. This move reflects the company’s commitment to rewarding its shareholders.

Additionally, the board proposed raising funds through the placement of unsecured/secured non-convertible bonds or debentures (NCDs) of up to ₹1,05,000 crore, subject to the approval of shareholders. This fund-raising initiative is planned to take place in one or more tranches over a one-year period starting from the date of approval at the ensuing annual general meeting.

To facilitate further financial flexibility, the board also sought shareholder approval for increasing the company’s borrowing limit from ₹4,50,000 crore to ₹6,00,000 crore in any foreign currency equivalent, scaling from $16 billion to $20 billion. This move allows REC to tap into both domestic and international markets for funding its operations and growth strategies.

Moreover, the board of directors approved the incorporation of nine project-specific special purpose vehicles (SPVs) as wholly owned subsidiaries of REC Power Development & Consultancy Limited, which is a wholly owned subsidiary of REC. These SPVs will be utilised for the selection of successful bidders in implementing inter-state transmission projects through tariff-based competitive bidding, following relevant directives from the Central Electricity Authority under the power ministry.

Ahead of the announcement of the Q1FY24 results, REC’s shares settled at ₹173.45 apiece on the BSE, marking a 0.78 per cent increase. This positive sentiment among investors indicates the market’s confidence in the company’s performance and future prospects.