REC Q4 FY26 profit drops 22%: key numbers

Shares slide after results, investors focus on earnings trend

Shares of Rural Electrification Corporation (REC) came under pressure after the company reported weaker March-quarter numbers. On Wednesday, the stock fell over 4% to an intraday low of ₹359 on the BSE following the earnings update. Around the same period, the stock was seen near ₹361.80, down about 3.73% (as cited in market data snapshots). The results were released post-market hours on Tuesday for the quarter ended March 31, 2026. Investors appeared to react to both the year-on-year decline in profit and the sequential slowdown. The move also came against a backdrop of mixed technical signals flagged by some market trackers.

Q4 FY26: profit down 22% YoY, revenue slips 5%

REC reported a 22% year-on-year drop in consolidated net profit to ₹3,375 crore for the January to March quarter of FY26. Consolidated revenue from operations fell about 5% YoY to ₹14,564 crore, compared with ₹15,334 crore in the same quarter last year. Total income for the quarter was reported at ₹14,583.39 crore, down 4.98% YoY. The quarter was also weaker sequentially, with consolidated net profit down 16.71% versus Q3 FY26 and total income down 3.16% QoQ. MarketsMOJO’s snapshot flagged a “threat” of degrowth in revenue, profits, and operating profit margin on a quarter-on-quarter basis. The negative QoQ trend mattered because it arrived after a period when REC had delivered steady full-year growth narratives in the market.

Interest income softens sequentially

REC’s interest income in Q4 FY26 stood at ₹14,119 crore. That compared with ₹14,560 crore in Q3 FY26 and ₹14,947 crore in Q4 FY25. The sequential decline in interest income aligned with the broader moderation seen in total income. The company’s quarterly revenue fall was also described as 3% sequentially in the report, alongside a 17% sequential decline in net profit. The latest quarter therefore reflected both YoY pressure and weaker momentum over the immediately preceding quarter. Investors typically track interest income closely for lenders like REC because it drives the core earnings profile.

Key quarterly financials at a glance

The following table summarises the quarterly metrics reported for the March 2026 quarter, alongside the immediately preceding quarter and the year-ago quarter.

Motilal Oswal keeps ‘Buy’, lifts target to ₹440

Despite the weaker quarter, Motilal Oswal reiterated its ‘Buy’ rating on REC. The brokerage raised its target price to ₹440 per share. It highlighted that the target implied an upside of more than 17% from the previous closing price of ₹375.80 per share on the NSE. Motilal Oswal characterised the quarter as subdued, noting that the loan book showed modest growth of nearly 3% YoY. It also pointed to weak disbursements and a sequential moderation in repayments in Q4 FY26. On profitability drivers, the brokerage noted that lower yields were offset by lower funding costs, helping spreads remain stable.

Asset quality improves, but margin and growth remain watch points

Motilal Oswal said asset quality continued to improve, with gross NPA (GNPA) declining to 0.2% in the quarter. It also flagged that REC trades at about 1x FY27E P/ABV, which it viewed as attractive. At the same time, the brokerage cautioned that weak loan growth and margin pressure remain key monitorables. Reflecting these concerns, it cut REC’s profit after tax (PAT) estimates by 9% for FY27 and 11% for FY28. The estimate cuts were attributed to lower margins and higher credit costs assumptions. The combination of improving GNPA and cautious earnings revisions framed the stock debate after results.

Stock performance: short-term bounce, one-year decline

Market data in the report showed REC shares had declined around 3% in one week but gained over 17% in one month. Over one year, the stock was down more than 13%. In another quoted snapshot, the share price of RECLTD was ₹375.80 as on April 28, 2026 (4:00 PM close on NSE). The company’s market capitalisation was cited at about ₹99,905 crore alongside a traded price near ₹375.65 in a post-results mention. Separate technical notes referenced mixed signals, including a weekly MACD crossover appearing in the week ending April 24, 2026. A 5-day EMA crossover was also described as a bearish signal on April 24, 2026, with prior “sell signals” showing average declines in historical instances (as cited by the technical summary).

Ratings and cash flow flags add to mixed picture

MarketsMOJO listed REC as “Rated Sell” in an update dated April 27, 2026, with the rating last updated on April 15, 2026. The platform also noted concerns such as debt not being well covered by operating cash flow and a dividend yield of 4.79% not being well covered by free cash flows. Relative performance metrics in the same snapshot stated that RECLTD underperformed the Indian diversified financial industry (which returned -5.9% over the past year) and underperformed the broader Indian market (which returned 4.2% over the past year). These indicators matter for investors weighing valuation comfort against funding and cash flow coverage. They also contextualise why a valuation-based ‘Buy’ call can coexist with a cautious or negative quantitative rating.

Market impact and why this quarter matters

The immediate market impact was visible in the post-result price drop and the day’s low of ₹359 on the BSE. The quarter reinforced a narrative of slower income growth and weaker sequential profitability, which tends to pressure sentiment in lending stocks. At the same time, the reported GNPA of 0.2% suggested continued strength in asset quality, an important support for the investment case. The divergence between improving credit metrics and softer earnings momentum is likely to keep the focus on spreads, margins, and disbursement pace in upcoming quarters. A separate headline also referenced REC board approval to raise up to ₹1.7 lakh crore in FY26 via debt, alongside a reported 2% share decline in that context, underscoring the ongoing role of funding decisions in market perception.

Conclusion: focus shifts to loan growth and margins

REC’s Q4 FY26 numbers showed a clear year-on-year and quarter-on-quarter decline in profit and income, triggering a sharp intraday fall in the share price. Broker commentary stayed constructive on valuation but explicitly flagged weak loan growth and margin pressures as key risks to track. With asset quality improving and estimates being revised for margins and credit costs, investors are likely to watch the next set of disclosures for clarity on disbursements, yields, and funding costs. Any further brokerage updates and management commentary around spreads and growth trends will be central to how the market prices the stock after this quarter’s reset.