REC Limited Powers Through H1 FY26 with Record Profits and Strategic Growth

REC Limited, a prominent Maharatna Company and a key player in India's power and infrastructure financing, has announced a stellar performance for the first half of Financial Year 2025-26. The company reported its highest ever half-yearly profit, underscoring its robust financial health and strategic execution. This impressive growth comes amidst a period of significant expansion and diversification, positioning REC as a pivotal entity in India's energy transition and infrastructure development.

For H1 FY26, REC recorded a profit after tax of ₹8,877 crore, marking a substantial 19% increase compared to ₹7,448 crore in H1 FY25. The total income also saw a healthy rise of 12%, reaching ₹29,828 crore from ₹26,633 crore in the corresponding period last year. Net interest income grew by 15% to ₹10,608 crore. This strong financial performance is complemented by a continuously improving asset quality, with net credit impaired assets significantly reducing to 0.24% from 0.88% year-on-year. The loan book expanded by a robust 7%, reaching ₹5.82 lakh crore, reflecting sustained demand and effective disbursement strategies.

Financial Highlights: A Snapshot

Strategic Diversification and Green Energy Push

REC's strategic initiatives extend beyond traditional power financing, with a notable foray into the infrastructure and logistics sectors. This diversification aims to tap into new growth avenues, complementing its core business in conventional generation, transmission, distribution, and renewable energy. The company's role as a nodal agency for several flagship government schemes, including the PM Surya Ghar Muft Bijli Yojana and the Revamped Distribution Sector Scheme, solidifies its strategic importance in national development.

The company's commitment to green energy is particularly strong. Its renewable energy loan book has grown more than threefold in the last five years, reflecting a dedicated push towards sustainable financing. REC has sanctioned over 61,400 MW of renewable energy projects, contributing significantly to India's emission avoidance goals with a potential of 71.2 million tonnes equivalent to 2.85 billion trees. This focus aligns with REC's ambition to become a net-zero company by FY26, targeting net-zero Scope 1 & 2 emissions by 2035.

Asset Quality and Shareholder Value

REC has demonstrated robust asset quality management, with a provision coverage ratio of 77.06% for Stage-3 assets. The recovery of ₹11,413 crore from the Kaleshwaram Irrigation Project, a Stage-II asset, highlights its effective resolution mechanisms. This proactive approach to asset management has been a key factor in its improved financial metrics.

Shareholder returns remain a priority, with REC consistently paying high dividends. The Board approved a second interim dividend of ₹4.60 per share for Q2 FY26, bringing the total dividend for H1 FY26 to ₹9.20 per share. The company's earnings per share (EPS) improved to ₹33.71, and the book value per share (BVPS) stands at ₹314.21, reflecting strong underlying value creation.

Outlook and Future Growth

Looking ahead, REC is bullish on the power sector's growth, anticipating a requirement of ₹46 lakh crore over the next four to five years. The company projects its loan book to reach ₹10 lakh crore by 2030, with renewable energy contributing 30% of this. Despite potential challenges such as increased competition in the renewable sector and discussions around DISCOM debt restructuring, management expressed confidence in achieving an 11-12% loan growth in the coming years. REC's diversified portfolio, strong government backing, and proactive risk management position it well for sustained growth and continued contribution to India's energy and infrastructure landscape.