Any current/future new fundraising through debt or equity?

The company is actively targeting large-scale green bond issuances, aiming for around ₹1,00,000 crore over the next 3-4 years. For the current year, they have already sanctioned ₹21,000 crore in green renewable energy projects and plan additional green bond issuances, including international ones (~₹50,000 crore). Foreign currency borrowing is ongoing, with an approved automatic route limit up to $750 million and annual approvals sought from RBI for higher limits; currently operating at about $11 million with room to raise about $5 million more. Capital gain bonds are also a rising sourc

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

Targeting around ₹1,00,000 crore investment through green bonds in the next 3-4 years. Distribution sector reform scheme (RDSS) involves ₹3,00,000 crore investment over next 3-4 years; ₹97,000 crore as GoI grant, balance through state borrowings. Transmission sector requires about ₹1,00,000 crore for renewable energy evacuation. Generation capacity limited to 30,000 MW conventional, costing ₹8 crore per MW. Smart metering: Installing 25 crore prepaid smart meters nationwide; ₹1,50,000 crore business on OPEX mode with guaranteed payments for 8-10 years. Infrastructure diversification into metro

Future growth expectations in sales/revenue/volumes?

REC expects a 10% growth in disbursements for the current year, targeting around ₹85,000 to ₹90,000 crores. For the next year, management targets a 12% growth in disbursements. Over the next three to four years, consistent growth of around 12% annually is anticipated due to expanding opportunities in renewable energy and infrastructure sectors. India’s per capita power consumption is currently one-third of the global average, indicating significant future demand growth. Renewable energy and sustainable climate change initiatives, along with government infrastructure priorities (including alloc

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

Management expects loan book growth of around 10% for the current year and 12% growth next year, with potential for higher growth beyond that. Growth is driven by renewable energy, sustainable climate initiatives, and non-power infrastructure projects prioritized by the government. Asset Under Management (AUM) growth and improved credit quality support sustaining Net Interest Margins (NIM) around 3.5%. Though renewable projects have lower margins (~2%), higher-quality assets in generation and distribution projects maintain spreads at 2.5%-3%, keeping overall margins stable. Internal accruals c

Current/ Expected Orderbook/ Pending Orders?

The sanctioned project book is roughly ₹2,00,000 crores. Out of this, about ₹1,92,000 crores are already sanctioned. Private sector exposure within this book is approximately ₹20,000 crores, largely in renewable energy. The remaining project loans are largely government guaranteed. The green bond-related book currently stands around ₹25,000 crores. Sanctions done this year in green renewable energy space amount to ₹21,000 crores, expected to disburse over time. The overall pipeline reflects strong growth with visibility on both green bonds and conventional infrastructure projects.

REC LtdQ3 FY23Finance

REC Ltd Q3 FY23 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

Yes

Order

Yes

Capex

Yes

3 of 5 growth signals are positive.

Full analysis

Revenue guidance

Category 3

REC expects a 10% growth in disbursements for the current year, targeting around ₹85,000 to ₹90,000 crores.
For the next year, management targets a 12% growth in disbursements.
Over the next three to four years, consistent growth of around 12% annually is anticipated due to expanding opportunities in renewable energy and infrastructure sectors.
India’s per capita power consumption is currently one-third of the global average, indicating significant future demand growth.
Renewable energy and sustainable climate change initiatives, along with government infrastructure priorities (including allocation of ₹10,00,000 crores in the budget), will drive growth.
The loan book is also expected to diversify, with private sector participation in new areas like hydrogen and ethanol, though this transition will take time (targeting 25-30% private participation by 2030).
Overall, REC plans volume growth alongside diversification into non-power infrastructure sectors like metro projects, roads, airports, and hospitals.

Margin guidance

Category 3

Management expects loan book growth of around 10% for the current year and 12% growth next year, with potential for higher growth beyond that.
Growth is driven by renewable energy, sustainable climate initiatives, and non-power infrastructure projects prioritized by the government.
Asset Under Management (AUM) growth and improved credit quality support sustaining Net Interest Margins (NIM) around 3.5%.
Though renewable projects have lower margins (~2%), higher-quality assets in generation and distribution projects maintain spreads at 2.5%-3%, keeping overall margins stable.
Internal accruals contribute around ₹7,000 crore yearly, providing strong capital support and headroom.
Resolution of stressed assets and provisioning write-backs positively impact profitability.
Management believes they can maintain or modestly improve earnings with balanced growth in quality assets and volume.

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

Fundraise plans

Yes

The company is actively targeting large-scale green bond issuances, aiming for around ₹1,00,000 crore over the next 3-4 years.
For the current year, they have already sanctioned ₹21,000 crore in green renewable energy projects and plan additional green bond issuances, including international ones (~₹50,000 crore).
Foreign currency borrowing is ongoing, with an approved automatic route limit up to $750 million and annual approvals sought from RBI for higher limits; currently operating at about $11 million with room to raise about $5 million more.
Capital gain bonds are also a rising source of funds, increasing steadily.
Bank loans, bonds, and ECBs (External Commercial Borrowings) form the funding mix; flexibility to choose the lowest cost option between corporate bonds, bank term loans, and others is maintained.
Roadshows for green bond issuance are planned, with 5-year tenors considered, not tax-free, mainly offshore.
The company plans 10-12% loan book growth annually, reflecting ongoing fundraising aligned with project financing needs.

Order book

Yes

The sanctioned project book is roughly ₹2,00,000 crores.
Out of this, about ₹1,92,000 crores are already sanctioned.
Private sector exposure within this book is approximately ₹20,000 crores, largely in renewable energy.
The remaining project loans are largely government guaranteed.
The green bond-related book currently stands around ₹25,000 crores.
Sanctions done this year in green renewable energy space amount to ₹21,000 crores, expected to disburse over time.
The overall pipeline reflects strong growth with visibility on both green bonds and conventional infrastructure projects.

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

Capex plans

Yes

Targeting around ₹1,00,000 crore investment through green bonds in the next 3-4 years.
Distribution sector reform scheme (RDSS) involves ₹3,00,000 crore investment over next 3-4 years; ₹97,000 crore as GoI grant, balance through state borrowings.
Transmission sector requires about ₹1,00,000 crore for renewable energy evacuation.
Generation capacity limited to 30,000 MW conventional, costing ₹8 crore per MW.
Smart metering: Installing 25 crore prepaid smart meters nationwide; ₹1,50,000 crore business on OPEX mode with guaranteed payments for 8-10 years.
Infrastructure diversification into metro, roadways, highways, airports, ports, and hospitals.
Private sector renewable investments expected to rise to 25-30% over next 3-4 years.
CAPEX projects continue with government guarantees; some private backed by assets.
Resolution plans involve fresh CAPEX of around ₹1,500 crore for unit completion in operational assets.

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REC Ltd Q3 FY23 Earnings Call Analysis

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