REC Hits Day's High, Share Price Surges Over 3% on Strong Q1FY25 Business Update

Shares of state-run power financier REC Ltd reached their day's high on July 1 following the company's report of strong business growth in the first quarter of 2024-2025. Around noon, the shares were up 3.10%, trading at ₹541.65 apiece on the BSE.

In a regulatory filing, REC reported that in Q1FY25, loan growth remained robust, driven by the renewables sector, which grew nearly 250%. 

REC recorded loan sanctions of ₹12,747 crore and loan disbursements of ₹43,652 crore during the first quarter ended June 30, 2024. This represents significant growth of 24.17% and 27.89%, respectively, compared to the corresponding quarter of the previous financial year 2023-24.

Out of the total loan sanctions, ₹39,655 crore was allocated to renewable energy projects, with ₹5,351 crore of the total loan disbursements going to these projects. REC, a Maharatna company, primarily focuses on financing rural electrification projects across India. For FY24, REC reported a net profit of ₹14,019 crore, marking a 27% increase from the ₹11,055 crore earned in FY23. Additionally, its net income rose by 49% to ₹15,063 crore over the same period.

During the June quarter of FY25, ₹39,655 crore was sanctioned for renewable energy projects, reflecting a 58.72% increase from the same period last year. Loan disbursements for these projects more than doubled, reaching ₹5,351 crore compared to ₹1,534 crore in the previous year.

REC's stock has been gaining for the last five trading sessions, fueled by news reports suggesting that the Ministry of Finance may propose some relaxation for finance companies regarding the Reserve Bank of India's proposed stringent project financing norms.

Earlier, in May, the Reserve Bank of India (RBI) proposed that lenders increase provisions for under-construction infrastructure projects and ensure strict monitoring for any emerging stress.

The RBI issued draft guidelines based on banks' experiences with project financing. Beginning in 2012-13, Indian banks faced significant defaults on infrastructure loans due to exuberant lending, which strained the banking system.

REC, operating under the Ministry of Power, is a non-banking financial company (NBFC) specializing in power sector financing in India.