REC Ltd Q3 FY26 Earnings Analysis

- REC Limited targets loan book growth of 11% to 12% in FY 2025-26, despite elevated prepayments in H1. - The company has a committed order book of nearly Rs. 2.5 lakh crores supporting future growth. - By 2030, REC aims for a Rs. 10 lakh crores loan book, with renewable energy expected to contribute 30% (~Rs. 3 lakh crores). - Highest half-yearly sanctions of Rs. 2.5 lakh crores reflect a 34% growth, with half-yearly disbursements at Rs. 1.15 lakh crores, a 27% increase YoY. - The power sector investment requirement over the next 4-5 years is estimated at Rs. 46 lakh crores, offering significant market potential. - REC expects continued robust business from state and private sectors, focusing on projects with good revenue streams regardless of ownership. - The company foresees growth in renewable portfolio share, distribution, and generation sectors, maintaining NIM between 3.5%-3.75%.

- REC is confident of achieving loan growth of 11% to 12% by the end of FY '26, supported by a committed order book of nearly Rs. 2.5 lakh crores. - Profit growth was strong in H1 FY '26, with highest ever half-yearly profits of Rs. 8,877 crores (19% YoY increase). - Earnings per share (EPS) improved to Rs. 33.71 per share; book value at Rs. 314.21 per share. - The company expects continued good performance in the next two quarters, aiming to maintain or improve profitability. - Return on net worth increased to 22.14%, indicating strong capital efficiency. - Asset quality improvement and recoveries (e.g., Kaleshwaram prepayment) support stable earnings outlook. - Spread and net interest margins targeted to stay within 2.75%-3.5% and 3.5%-3.75%, respectively, despite growth in renewables and competition. - Resolution of stressed assets expected in FY '26, which should further stabilize earnings.

- REC has a committed order book of nearly Rs. 2.5 lakh crores indicating strong future capital investment opportunities. - Growth expectations include increasing share of renewables, generation, and distribution sectors, reflecting ongoing and future capex. - The company is optimistic about growth in sanctioned projects, with generation sanctions increasing from Rs. 53,000 crores in H1 ’25 to Rs. 1,13,000 crores. - Distribution sanctions have also grown substantially from Rs. 36,000 crores to Rs. 71,000 crores. - REC plans to fund projects based on good revenue streams regardless of government or private ownership. - There is a focus on improving infrastructure, reliability, and quality of power distribution, expected to drive capex growth post debt restructuring in DISCOMs. - No specific new strategic investments detailed, but ongoing project financing aligned with government and private sector initiatives under NEP 2032.

- No specific mention of current or future fundraising through equity during the call. - Borrowing cost increased marginally due to risk mitigation measures in foreign currency borrowings. - Foreign currency borrowings of Rs. 1,55,000 crores are about 99% hedged. - There is focus on managing borrowing costs, with 80-85% of borrowings at fixed cost. - No explicit plan disclosed for raising new debt or equity in the near term. - Management emphasizes achieving loan growth of 11%-12% despite prepayments, indicating continued lending capacity. - RBI's new project financing norms effective October 1, 2025, apply to new projects, potentially impacting future sanctions but not immediate fundraising. - Comments suggest fundraising and costs will be carefully optimized without significantly altering the borrowing profile.

- REC Limited has a committed order book of nearly Rs. 2.5 lakh crores as of October 29, 2025. - This robust order book supports future growth and underpins the company's confidence in achieving an 11% to 12% loan growth rate in the coming years. - With plans to increase the loan book to Rs. 10 lakh crores by 2030, the current order book is a significant foundation toward that target. - The company sees a large market potential across various power sector segments including renewables, thermal, hydro, nuclear, storage, transmission, and distribution investment totaling approximately Rs. 46 lakh crores over the next 4-5 years.