REC Q4 FY26: Profit slips 22%, dividend ₹18.55

Stock drops after results and a weaker quarter

Shares of Rural Electrification Corporation (REC) fell over 4% to an intraday low of ₹359 on the BSE on Wednesday after the company reported a weaker set of March-quarter numbers. The state-run financier said consolidated net profit for the January to March quarter of FY26 fell 22% year-on-year (YoY) to ₹3,375 crore. Revenue from operations also declined, down 5% YoY to ₹14,564 crore from ₹15,334 crore in the same quarter last year. The results were released after market hours on Tuesday for the quarter ended March 31, 2026. Investors reacted to the combined impact of lower profit and lower revenue in a quarter when the broader focus remains on earnings momentum and loan growth. The stock was also tracked closely because REC is widely held for its dividend payout track record. Despite the price fall, one brokerage highlighted valuation comfort and retained a positive stance.

Q4 FY26 numbers: profit down, revenue softer

REC’s consolidated net profit in Q4 FY26 came in at ₹3,375 crore, compared with a year-ago profit of about ₹4,310 crore (as reported alongside the YoY change). On a sequential basis, the company’s net profit declined 17% from Q3 FY26. Revenue from operations fell to ₹14,564 crore, and the company also saw a 3% sequential decline in revenue. Interest income in Q4 FY26 was reported at ₹14,119 crore, lower than ₹14,560 crore in Q3 FY26 and ₹14,947 crore in Q4 FY25. The quarter, as described by the brokerage note cited in the report, was subdued with modest loan book growth and weaker disbursements. At the same time, lower funding costs helped offset the decline in yields, supporting relatively stable spreads. Asset quality was cited as improving during the quarter. These operating moving parts were a key part of how analysts framed the results beyond the headline profit decline.

Dividend announcement: ₹18.55 per share for FY26

Along with the quarterly results, REC announced a final dividend of ₹1.55 per equity share for FY26, subject to shareholder approval at the upcoming Annual General Meeting (AGM). This final dividend is in addition to interim dividends of ₹17 per equity share already declared during FY26 in four tranches. That takes the total dividend for FY26 to ₹18.55 per equity share. The company said the final dividend, once approved, will be paid within 30 days from the date of declaration at the ensuing AGM. For many investors, the payout visibility and timeline matters because REC is often evaluated on dividend yield and consistency. The announcement also provides a defined near-term corporate action catalyst, even as the market digests the quarterly earnings decline. Investors typically watch whether payouts remain aligned with profitability and capital needs. In REC’s case, the headline payout number was clearly communicated alongside the results.

Motilal Oswal: Buy maintained, target raised to ₹440

Motilal Oswal maintained its ‘Buy’ rating on REC despite the weaker quarter. The brokerage increased its target price to ₹440 per share. Based on the previous closing price of ₹375.80 per share on the NSE, the target implied an upside potential of more than 17%, as cited in the report. Motilal Oswal said REC reported a subdued quarter and flagged that the loan book showed modest growth of nearly 3% YoY. It also noted that disbursements continued to remain weak, while repayments moderated sequentially in Q4 FY26. On margins, it highlighted that a decline in yields was offset by lower funding costs, helping keep spreads stable. It further pointed to improving asset quality, with gross non-performing assets (GNPA) declining to 0.2% during the quarter. The brokerage said REC trades at about 1x FY27E P/ABV and called valuations attractive, while also flagging weak loan growth and margin pressure as monitorables.

Estimate changes: lower margin and higher credit cost assumptions

Motilal Oswal cut its profit after tax (PAT) estimates for REC by 9% for FY27 and 11% for FY28. The stated reasons were lower margins and higher credit costs. For investors, this matters because target prices and recommendations often sit alongside changes in earnings assumptions, especially when the quarter shows softer profitability. The brokerage’s caution on margins indicates that the market will likely keep tracking funding costs, yields, and any shifts in the mix of assets and liabilities. The mention of weak disbursements also puts the focus on whether loan growth picks up or remains muted. Even with stable spreads in the quarter, the updated forecasts show that analysts are building in a more conservative trajectory for the next two financial years. These revisions can influence how valuation multiples are interpreted, particularly when the stock is also followed for its dividend payout. It also signals that the ‘Buy’ call is more valuation-driven than momentum-driven, based on the note cited.

Share price performance: short-term weakness, long-term gains

REC shares were reported to be down around 3% over one week, while gaining over 17% in one month. Over one year, the stock was reported to have declined by over 13%. Over longer periods, the report cited a rally of 183% in three years and 290% in five years. These mixed time-horizon returns underline why the stock draws both tactical traders and longer-term investors. The immediate market reaction followed the earnings decline, but the broader story remains shaped by prior strong returns and the stock’s role as a dividend play. The article also cited market capitalisation figures from different sources, including nearly ₹45,842 crore and around ₹99,905 crore, reflecting differences in reported datasets. A separate metrics table in the article listed market cap at ₹99,456.87 crore. Such variations are common across platforms depending on timestamps and classification, and readers should treat them as source-specific snapshots.

Key reported metrics and numbers at a glance

Market impact: what investors are likely to track

The sharp one-day move in the stock price highlighted the market’s sensitivity to earnings downgrades and growth commentary for large PSU lenders and financiers. The quarter showed lower profit and a decline in revenue, and the brokerage commentary pointed to modest loan book growth and weak disbursements. At the same time, the report flagged improving asset quality, with GNPA at 0.2%, which can act as a stabilising factor for valuation narratives. Dividend announcements can support sentiment, but they do not fully offset concerns if growth and margins remain under pressure. The valuation argument cited by Motilal Oswal, including trading at about 1x FY27E P/ABV, suggests part of the market’s debate will be whether the stock is already discounting slower growth. Investors are also likely to watch any further changes to earnings estimates across brokerages after the PAT cuts for FY27 and FY28 mentioned in the note. Finally, the promised timeline for the final dividend payout within 30 days of AGM declaration provides a clear near-term event to monitor.

Why this quarter matters for REC’s narrative

REC is widely tracked as a key financier in India’s power ecosystem and as a high dividend-paying PSU stock. A quarter with lower profit and softer revenue can shift the discussion from payout-led attractiveness to business momentum, especially around disbursements and repayments. The brokerage note cited in the report drew attention to spreads staying stable due to lower funding costs, indicating the operating model remains sensitive to rate and funding dynamics. The continued improvement in asset quality, highlighted through the GNPA figure, is a critical counterbalance in the story because credit quality drives both profitability and confidence in future payouts. Motilal Oswal’s decision to retain a Buy call while cutting forward PAT estimates shows a nuanced stance: supportive on valuation, cautious on near-term fundamentals. For investors, the next set of disclosures and management commentary will matter in assessing whether the subdued quarter was a one-off or part of a slower growth phase. Until then, the stock’s movement may continue to reflect a mix of dividend expectations, valuation comfort, and growth uncertainty.

Conclusion

REC’s Q4 FY26 results showed a 22% YoY decline in consolidated net profit to ₹3,375 crore and a 5% YoY drop in revenue from operations to ₹14,564 crore, triggering a more than 4% intraday fall in the stock. Even so, Motilal Oswal maintained a Buy rating and raised its target price to ₹440, while flagging loan growth and margin pressure as key monitorables. The company also announced a final dividend of ₹1.55 per share, taking the total FY26 dividend to ₹18.55 per share, with payment expected within 30 days of AGM declaration after approval. The next focus points for investors will likely be loan growth traction, disbursement trends, and any further updates on margins and credit costs in subsequent quarters.