Rural Electrification Corporation Ltd's Q4FY18 standalone net profit declines 36.7% yoy to Rs835cr : Misses Estimates

The company’s standalone NII stood at Rs1,702cr, down 25.7% yoy and 17.6% qoq

May 28, 2018 01:05 IST India Infoline Research Team

Rural Electrification Corporation Ltd Q4FY18

Standalone Results Q4FY18: (Rs. in cr)

Q4FY18 YoY (%)
NII 1,702 [25.8]
Net Profit (adjusted) 835 [36.7]

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Reco. Price

115

Last updated on

15-May-2018


REC reported a significant miss against consensus estimates for Q4FY18. Net Interest Income shrunk by 19% yoy to Rs1,702cr (expectation Rs2,165cr). Net Income stood at Rs835cr against an estimate of Rs1,286cr. Provisions in Q4FY18 stood at Rs557cr.
  • Loan book at the end of FY18 stood at Rs2.39 lakh cr, an increase of 19% yoy. Gross NPAs at the end of FY18 stood at 3.14%, up 73bps yoy.
  • Yield on assets stood at 10.55% in FY18, a decrease of 109bps yoy. Cost of funds decreased by 60bps yoy to 7.53% in FY18. As a result, Net Interest Margin stood at 3.89% in FY18, a decrease of 76bps.
  • The degradation of operational performance of REC led to ROE falling 666bps yoy to 13.51%. Tier-I Capital Adequacy Ratio also fell by 20bps yoy to 2.55%.
  • Composition of Loan Assets at the end of FY18 stood at:
    • Generation – Rs1.05 lakh cr (45% of assets)
    • Renewables – Rs3.4 thousand cr (1% of assets)
    • Transmission – Rs44.3 thousand cr (19% of assets)
    • Distribution – Rs80.9 thousand cr (33% of assets)

Technical View:

Rural Electrification Corporation Ltd ended at Rs. 119.25, up by 5.6 points or 4.93% from its previous closing of Rs. 113.65 on the BSE.
The scrip opened at Rs. 114.50 and touched a high and low of Rs. 120.55 and Rs. 114.35 respectively. A total of 67,53,757 (NSE+BSE) shares were traded on the counter. The stock traded above its 200 DMA.


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