Any current/future new fundraising through debt or equity?

There is no explicit mention of new fundraising through debt or equity in the provided transcript. However, the company highlighted that it has managed to reduce its incremental cost of funds to around 6.85%, largely due to foreign currency borrowings and increased borrowing under 54EC bonds. The company expects steady loan book growth at around 15% per year, indicating ongoing financing activity. The emphasis is on transitioning loans from three-year rate resets to one-year resets, reflecting a focus on risk management rather than raising new capital. Discussions reflect strong disbursement t

Any current/future capex/capital investment/strategic investment?

REC plans significant capex/capital investment in energy transition initiatives, targeting Rs. 15 lakh Crores funding requirement by 2030, capturing 20-30% of this business. Focus areas include renewable energy generation (solar, wind, hybrid, storage solutions), battery energy storage, pumped storage hydro, green hydrogen, and green ammonia projects. Large investments in upgrading and modernizing the distribution sector, which will maintain about 30-35% share in REC's loan portfolio over the next 10-15 years. Financing of green energy corridors for renewable energy evacuation is planned. Incr

Future growth expectations in sales/revenue/volumes?

REC Limited expects a conservative loan book growth of around 15% annually, with potential to grow even more due to huge opportunities. (Page 17) Disbursements are projected to reach approximately Rs. 150,000 Crores in the current financial year, up from Rs. 97,000 Crores last year. (Page 11) The renewable energy segment, with Government of India targeting 500 GW non-fossil capacity by 2030, presents massive financing opportunities, with around Rs. 15 Lakhs Crores funding requirement expected by 2030 in energy transition initiatives. REC aims to capture 20-30% of this business. (Page 11) Distr

Future growth expectations in earnings/operating earnings/profits/EPS?

REC Limited targets a loan book growth of around 15% annually on a conservative basis, with potential for higher growth given huge opportunities (Page 17). Disbursements have surged, with Rs.53,000 Crores done by Q1 FY2024 and a projection of Rs.1,50,000 Crores for the full year, indicating strong growth in lending activity (Page 11). The company aims to increase its Net Interest Margin (NIM) to around 3.5% by the end of the current year, up from 3.28%, supported by rate resets and improved spreads (Pages 13, 21). Spread is targeted at approximately 2.5%, balancing lower margins in renewables

Current/ Expected Orderbook/ Pending Orders?

As of Q1 FY2024, REC's disbursement stood at Rs. 53,000 Crores, with a target of Rs. 150,000 Crores for the full financial year. Significant pending loan book growth opportunities, targeting a conservative loan book growth of 15% going forward. Long-term outlook aims for a loan book size of Rs. 10 lakh Crores by FY2030, implying around 12% CAGR. Renewable energy and infrastructure sectors comprise large parts of order pipelines, with strong traction and increasing applications for financing. Large opportunities exist in energy transition initiatives worth Rs. 3-4 lakh Crores; REC targe

REC LtdQ1 FY24Finance

REC Ltd Q1 FY24 Earnings Call Analysis

Revenue, margin, capex, fundraise and order book outlook from management commentary.

Price: ₹292P/E: 5.1Market Cap: ₹82.4K CrSector: Finance

Management growth scorecard

Revenue

Category 3

Margin

Category 3

Fundraise

N/A

Order

Yes

Capex

Yes

2 of 4 growth signals are positive.

Full analysis

Revenue guidance

Category 3

REC Limited expects a conservative loan book growth of around 15% annually, with potential to grow even more due to huge opportunities. (Page 17)
Disbursements are projected to reach approximately Rs. 150,000 Crores in the current financial year, up from Rs. 97,000 Crores last year. (Page 11)
The renewable energy segment, with Government of India targeting 500 GW non-fossil capacity by 2030, presents massive financing opportunities, with around Rs. 15 Lakhs Crores funding requirement expected by 2030 in energy transition initiatives. REC aims to capture 20-30% of this business. (Page 11)
Distribution sector expected to remain stable at 30-35% of total portfolio over next 10-15 years due to ongoing infrastructure upgrades. (Pages 9, 10)
Private sector portfolio share expected to increase from current 10% to 30% in next 7 years driven by renewable energy projects. (Page 9)
Incremental growth driven by expanding renewable energy, storage solutions, and green hydrogen financing opportunities.

Margin guidance

Category 3

REC Limited targets a loan book growth of around 15% annually on a conservative basis, with potential for higher growth given huge opportunities (Page 17).
Disbursements have surged, with Rs.53,000 Crores done by Q1 FY2024 and a projection of Rs.1,50,000 Crores for the full year, indicating strong growth in lending activity (Page 11).
The company aims to increase its Net Interest Margin (NIM) to around 3.5% by the end of the current year, up from 3.28%, supported by rate resets and improved spreads (Pages 13, 21).
Spread is targeted at approximately 2.5%, balancing lower margins in renewables with better margins in infrastructure loans (Pages 20-21).
Asset quality is a priority, with net NPAs targeted to reach zero by end-2025, supporting stable operating profits (Page 23).
ROE has historically been 20-21% with management aiming to maintain this despite growth and capital base expansion (Page 22).

See what REC Ltd management said on margin guidance — free account, 30 seconds.

Fundraise plans

There is no explicit mention of new fundraising through debt or equity in the provided transcript.
However, the company highlighted that it has managed to reduce its incremental cost of funds to around 6.85%, largely due to foreign currency borrowings and increased borrowing under 54EC bonds.
The company expects steady loan book growth at around 15% per year, indicating ongoing financing activity.
The emphasis is on transitioning loans from three-year rate resets to one-year resets, reflecting a focus on risk management rather than raising new capital.
Discussions reflect strong disbursement targets (Rs. 1,50,000 Cr in current FY) and large lending exposure, but no direct mention of fresh fundraising via equity or debt issuance.

Order book

Yes

As of Q1 FY2024, REC's disbursement stood at Rs. 53,000 Crores, with a target of Rs. 150,000 Crores for the full financial year.
Significant pending loan book growth opportunities, targeting a conservative loan book growth of 15% going forward.
Long-term outlook aims for a loan book size of Rs. 10 lakh Crores by FY2030, implying around 12% CAGR.
Renewable energy and infrastructure sectors comprise large parts of order pipelines, with strong traction and increasing applications for financing.
Large opportunities exist in energy transition initiatives worth Rs. 3-4 lakh Crores; REC targets 20-30% share.
Bridge financing for states needing to clear renewable energy framework evaluations is planned, with a total outlay around Rs. 3 lakh Crores.
Resolution plans underway for stressed assets amounts to about $1 billion, with 9 projects targeted for resolution in the current year.

See what REC Ltd management said on order book — free account, 30 seconds.

Capex plans

Yes

REC plans significant capex/capital investment in energy transition initiatives, targeting Rs. 15 lakh Crores funding requirement by 2030, capturing 20-30% of this business.
Focus areas include renewable energy generation (solar, wind, hybrid, storage solutions), battery energy storage, pumped storage hydro, green hydrogen, and green ammonia projects.
Large investments in upgrading and modernizing the distribution sector, which will maintain about 30-35% share in REC's loan portfolio over the next 10-15 years.
Financing of green energy corridors for renewable energy evacuation is planned.
Increasing non-power infrastructure and logistics sector financing from the current 1% to about 30% of the loan book by 2030.
Collaboration with banks like SBI, Punjab National Bank, and others for large infrastructure projects including refining and steel sectors.
Recruitment of about 125 new officials and 28 sector experts in non-power infrastructure sectors to support growth and project appraisal.

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REC Ltd Q1 FY24 Earnings Call Analysis

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