RECLTDNSENovember 4, 2025

REC Limited

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Management on call

Jitendra Srivastava

IAS – CHAIRMAN AND

Harsh Baweja

DIRECTOR FINANCE – REC LIMITED

T.S.C. Bosh

DIRECTOR PROJECTS – REC LIMITED

Mohan Lal Kumawat

EXECUTIVE DIRECTOR

Pankaj Verma

HOD FINANCE- REC LIMITED

Supreet Pandya

DEPUTY GENERAL MANAGER

Shweta Daptardar

ELARA SECURITIES INDIA PRIVATE LIMITED

Key numbers — 40 extracted

Rs. 8,877 crore

ights for the half year: This half year, we have recorded our highest ever half yearly profits of Rs. 8,877 crores, which is a growth of 19% from the corresponding period of last year. Our total income has incre

19%

, we have recorded our highest ever half yearly profits of Rs. 8,877 crores, which is a growth of 19% from the corresponding period of last year. Our total income has increased to Rs. 29,828 crores,

Rs. 29,828 crore

is a growth of 19% from the corresponding period of last year. Our total income has increased to Rs. 29,828 crores, that is a growth of 12%. The net interest income increasing to Rs. 10,608 crores, a growth of 1

12%

ing period of last year. Our total income has increased to Rs. 29,828 crores, that is a growth of 12%. The net interest income increasing to Rs. 10,608 crores, a growth of 15%. The loan book has re

Rs. 10,608 crore

as increased to Rs. 29,828 crores, that is a growth of 12%. The net interest income increasing to Rs. 10,608 crores, a growth of 15%. The loan book has reached Rs. 5.82 lakh crores, a growth of 7% YoY. The net cr

15%

es, that is a growth of 12%. The net interest income increasing to Rs. 10,608 crores, a growth of 15%. The loan book has reached Rs. 5.82 lakh crores, a growth of 7% YoY. The net credit impaired as

Rs. 5.82 lakh crore

net interest income increasing to Rs. 10,608 crores, a growth of 15%. The loan book has reached Rs. 5.82 lakh crores, a growth of 7% YoY. The net credit impaired assets have reduced to 0.24%. And our net worth has

Rs. 10,608 crores, a growth of 15%. The loan book has reached Rs. 5.82 lakh crores, a growth of 7% YoY. The net credit impaired assets have reduced to 0.24%. And our net worth has reached its high

0.24%

reached Rs. 5.82 lakh crores, a growth of 7% YoY. The net credit impaired assets have reduced to 0.24%. And our net worth has reached its highest ever level of Rs. 82,739 crores. The capital adequacy

Rs. 82,739 crore

it impaired assets have reduced to 0.24%. And our net worth has reached its highest ever level of Rs. 82,739 crores. The capital adequacy ratio is sitting comfortably at 23.74%, as against the RBI requirement of

23.74%

its highest ever level of Rs. 82,739 crores. The capital adequacy ratio is sitting comfortably at 23.74%, as against the RBI requirement of 15%. On the Profit and Loss side: Our half-year profits we

Rs. 28,686 crore

Our half-year profits were at Rs. 8,877 crores, in which the interest income on loan assets was Rs. 28,686 crores, and the net interest income of Rs. 10,608 crores. The total comprehensive income was Rs. 7,081

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Guidance — 20 items

To take you through to the asset quality

opening

“11,400 crores from Kaleshwaram Irrigation Project, which was a Stage-2 asset till 30th of June 2025.”

To take you through to the asset quality

opening

“We have total 11 assets, of which 10 are under NCLT, where a provision of 77% is there, and one project worth Rs.”

Jitendra Srivastava

opening

“11,000 crores have come from the Kaleshwaram Irrigation Project, which has ensured that our Stage-2 assets have reduced by almost 52%.”

Jitendra Srivastava

opening

“I would like to inform all our investors and our shareholders that we are well on track to achieving this.”

Jitendra Srivastava

opening

“We are moving up to our target, and we are very, very confident that come 2030, REC will be Rs.”

Jitendra Srivastava

opening

“46 lakh crores will be required over the next four or five years towards the entire power sector.”

Jitendra Srivastava

opening

“In PM Surya Ghar Bijli Yojana, we are the single implementing agency for the entire, for the very ambitious program, and this ambitious program seeks to target 1 crores households by 2028.”

Jitendra Srivastava

opening

“Very recently, we have, even as we speak today, we will be signing an MoU with the Ministry of Shipping for investment in the shipping and maritime sector of our country.”

Jitendra Srivastava

opening

“Similarly, the metros, the ports, the road transport schemes, and the road transport projects, any good infrastructure project which has steady revenue streams is going to be our priority, and we are working very hard with the state governments and with the private sector partners to ensure that we are going from strength-to-strength.”

Jitendra Srivastava

opening

“As I conclude, I extend my heartfelt gratitude to the Honorable Minister of Power, the Honorable Minister of New and Renewable Energy, the Honorable Minister of State for Power and Renewable Energy, the Secretary of Power, and all esteemed officials of the Ministry of Power for their steadfast support and visionary guidance.”

Risks & concerns — 15 flagged

In fact, we are the first Indian public sector NBFC which is compliant with ISO 31000 Risk Management Framework.

— Supreet Pandya

As far as my borrowing cost is concerned, that has increased a little bit, since that is all because of some of the risk mitigation measures which we have taken in respect of the foreign borrowings.

— Harsh Baweja

Was there some risk, maybe some cost which was incurred on the hedging?

— Kunal Shah

Firstly, again, on the growth front, so basically in terms of competition, given that we have a 20%-25% market share and the potential market size is quite huge, but after the repo rate cuts, are we seeing the competition increasing, particularly from PSU banks or from government institutions like NaBFID or any other type of institution and that could potentially lead to some pressure on the yields going ahead?

— Chintan Shah

Second part is that what is happening there in the transmission, your transmission part of your book, because that is also seeing decline.

— Avinash Singh

So, what is leading to this decline in transmission?

— Avinash Singh

This is an evidence that the regular business is flowing and we are not seeing any kind of challenge in taking up these projects by the state sector since these projects have come with the DPR and these have been duly appraised.

— Harsh Baweja

And sir, what explains this decline in transmission AUM?

— Avinash Singh

So, nearly a 19% decline there, loan book.

— Avinash Singh

And if it does, what are the consequences you see for that debt being transferred to the state government or any risk of a rate cut which we might have to take?

— Nikhil Nigania

Do you see any risk of our spreads being asked to be compressed on the DISCOM debt side due to this?

— Nikhil Nigania

No, we don't see any kind of risk associated with them.

— Harsh Baweja

But we are not seeing any kind of challenge or any kind of difficulty in recovering these amounts.

— Harsh Baweja

Now, in that case, what is the risk you envisage that still 40% of your AUM is through distribution companies?

— Harshit Toshniwal

If the trend of privatization happens at a much faster pace in the next five to six years, is it a risk that you foresee to your Rs.

— Harshit Toshniwal

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Q&A — 13 exchanges

Sir, I just wanted to ask you two questions. One is, I mean, this Kaleshwaram Project, right, very clearly, it is a good thing that we have received given that it was a Stage-2 asset. But when we guided for the 12% growth in FY '26, loan growth of 12% in FY '26, was this factored in? And now that task rate for the second half is much higher, are we confident that we will be able to deliver on the guidance, or is there a reason to believe that the growth will actually be lower than what we had guided at the beginning of the year?

Jitendra Srivastava

Yes, so you said you will be asking two points. I am assuming that is only one. Yes, sir. So, I can maybe complete the second question as well. The other thing I wanted to understand is, I mean, on and off we keep hearing that both Hiranmaye Power as well as Sinnar Thermal are in advanced stages of resolution. So, is there a case that any of these two could get resolved in the current quarter? So, basically, what I am trying to understand is if you could briefly share what is the status of resolution in some of the stressed assets for us. Those two questions. So, I will answer them first. Yes,

So, first question is that there was a draft amendment by RBI in which they were proposing to lower capital requirements for lending to high-quality infra projects. So, just wanted to know your thoughts on this. How can this benefit us, or can this lead to higher competition? That was one. Second is on your margins. So, just wanted to understand that as RE shares will increase in our books, can that lead to lower margins for us? How should we broadly think about that? Those are my two questions.

Harsh Baweja

First of all, as far as the RBI guidelines have come, these are at the draft stage, and these guidelines are good for us. We are also submitting our comments to the RBI. And we have seen in the past also that whenever the final guidelines are issued, they are generally issued much refined and if you see that these guidelines basically have come as a replacement of the earlier PPP guidelines which were in place. So, these guidelines are in a much better shape. And we expect feedback from many of the institutions, in that case, we can expect that these guidelines would be in a much better shape.

So, the question was particularly on margins for this quarter and in terms of the overall cost of funds. So, the borrowings have remained flat, or it has come off marginally on a quarter-on- quarter basis, but still, the finance cost is up quite a bit. So, not able to get in terms of the increase in the cost of funds during the quarter wherein we would have seen some benefit of repricing of the liabilities. So, if you can just highlight that, yes.

Harsh Baweja

As far as my borrowing cost is concerned, that has increased a little bit, since that is all because of some of the risk mitigation measures which we have taken in respect of the foreign borrowings. Because of the volatility, we had to take some of the measures that have added to the cost. Further, as regards my borrowing cost, almost 80% to 85% is of the fixed cost nature. So, generally, out of that, only 20% redeemed in a year, and all the loan gets redeemed over a period of five years. So, that affects borrowing cost in the years to come, not immediately affects my borrowing cost. So, becau

Sir, firstly, just wanted to have some clarity on this Kaleshwaram Project total exposure. And with respect to incremental pre-payments, all of it would be received in Q3 itself, or that can get, let's say, split into two, three quarters sort of a time period?

Harsh Baweja

Kaleshwaram total outstanding was around Rs. 17,000 crores, of which Rs. 11,400 crores have already been received. Rest, since it is a space to assess, and we have always focused on the quality of the assets, so that is why we have recovered this much amount from the Kaleshwaram, and that has gone into some kind of litigations also. So, it is good in the interest of the company that we get the prepaid for that. That is why we decided to accept the prepayment for the Kaleshwaram loan. And we expect that the rest of the amount may come in Q3 and Q4. But it is good for the company that the Stage-

Harsh Baweja

We had reduced card rate in the month of May. And somewhere you will have to understand that we are also in the business. And what is evident is that our disbursement has grown substantially during the Q1 and Q2. So, that is an evidence that we are very much proactive in the market, and we are very much competitive in the market. So, on that front, you need not to worry. And we expect that the competition will come as far as the renewable sector is concerned from the market and there, our rates are the lowest in the market. As far as the other sectors are concerned, REC and the PFC majorly wil

Questions around growth, I mean, the guidance broadly for the next five years looks kind of very, very clear. But if we were to see the growth trend, particularly in the segment like conventional generation, your large part of, I mean, if I see your borrower category here in the state utilities, but there, despite whatever NEP targets and all, the momentum as far as the new thermal power in the state sector is concerned, the state utilities, it is very, very slow. Now, there if you see this trend continues, do you see your conventional generation, disbursement or AUM growth reviving? Because t

Jitendra Srivastava

I will take your last question first. We don't plan exactly when we look at what would be a comfortable government or private. We don't go by the nature of the borrower. We go by the nature of the project and its potential to deliver well. So, we fund irrespective of whether it is a government project or a private sector project. So, I hope that answers your question. As long as it's a good project, it gives you a good revenue stream, we will fund it. We will keep on funding it irrespective of whether it is a government project or a private sector project. That's the first part. What was your

My first question is on the DISCOM debt side. There have been murmors that the DISCOM debt has become quite large. So, any chance of restructuring or any discussions on debt restructuring for DISCOMs that are happening? And if it does, what are the consequences you see for that debt being transferred to the state government or any risk of a rate cut which we might have to take? If you could please answer that.

Jitendra Srivastava

So, I will just come in from the first part. As far as debt is concerned of DISCOMs, primarily six states account for a huge amount of the debt. I think it is UP, Karnataka, Tamil Nadu. I am forgetting the names of the states, but primarily it is concentrated in six states. And Government of India is working for a debt restructuring package that is in the process of development. And I think consultations are at an advanced stage. So, it would not be proper for me to comment on this until something more concrete has come out. But let me assure you that whatever is finally taken, I think a bette

I think we can take the next person.

Saket Jadav

Sorry about that, sir. Thank you for the clear updates, and thank you, CMD, sir, for laying out the long-term vision so clearly. My question was primarily on asset quality. Apart from the one account, Kaleshwaram account, where we have received the repayment, the other Stage-2 assets, do you foresee, does the company foresee any risks over there, or are they largely contained? No, we don't see any kind of risk associated with them. In some of the cases, that is Teesta Urja and the O2 Power, these two cases are concerned, they have been regularly making the payment. In the case of O2, their rat

Sir, the question was regarding the privatization of DISCOMs. So, we have in UP government, specifically, for example, the first stages there were probably it's on the tender and two out of the six DISCOMs will be privatized. Now, sir, if I look at the trend, as you said, that if DISCOM balance sheet improves by government help and it remains a government entity, till then it is beneficial for us. For example, if it gets privatized, then the private player will not seek debt from us. He will want to seek debt at a much better rate from the other financial institutions. Now, in that case, what

Jitendra Srivastava

What makes you think a private DISCOM will not come to REC for funding? And what makes you think we will not be in a position to give them competitive rates? And if you are scared that we will lower our interest rates too much, let me assure you that while our rates will remain competitive, it is not just rates that come into factor when you are deciding a loan portfolio. There are ‘n’ number of other conditions, pre-disbursement conditions, post-disbursement conditions, which also come into play. So, all these are taken into account by the borrower before he takes the final call on his borrow

If you could tell us what is your Stage-2 number as of September 30th?

Harsh Baweja

Total are of Rs. 16,112 crores, of which AP Rayalseema is Rs. 740 crores, TSWRIDC is Rs. 9,700 crores, Teesta Urja is Rs. 3,300 crores, TRN Energy Rs. 1,000 crores, and XL Xergi - O2 Power is Rs. 1,200 crores. So, total is around Rs. 16,000 crores, and we are getting regular repayments from them. And the last quarter, it would be Rs. 28,000 crores because Kaleshwaram. Last quarter, it was Rs. 33,000 crores. 33? Yes. And sir, just on this Kaleshwaram thing, how did they resolve the project? Was it moved to the state government? Like who took over the debt? Actually, we are concerned with our re

My question was pertaining to the pricing. So, when we say that we are focusing on projects where there is government. Sir, my question was on pricing. So, when you say that we are focusing on projects where there is steady cash flow and also where there is state government involvement, are we not facing any competition there from banks? And what sort of pricing or spreads that we believe can play out in such projects?

Jitendra Srivastava

So, let me put it this way. I mentioned this to a previous person. I am forgetting his name who had asked this question. See, when a person takes a decision to fund a project, we look at the IRR of the project, number one. We look at the credentials of the promoter or the state government or the entity, as the case may be, whether it is a private or a state government entity. We look at the government guarantee or lack of it. We take that into consideration. But having said this, the borrower also, apart from the interest rate, looks at ease of delivery, ability to decide fast, ability to take

One thing that I wanted to get clarity on was the increase in the provision expense during this quarter. If you could just break down or break it down on what were the factors for that expense and how much was the reversal from Kaleshwaram.

Harsh Baweja

As far as the regular disbursements are concerned, we have made a provision of Rs. 371 crores in the half year, that is for the half year. And some reversals have taken place because of the re- ratings of the borrowing agencies of Rs. 561 crores. Then LGD change is minus Rs. 101 crores. Then delay in COD, we have made an extra provision of Rs. 106 crores. Then reversal on account of TRN Energy, that was Rs. 272 crores. So, overall, for H1, it is minus Rs. 490 crores.

I would like to thank all of you. We feel proud that we are able to deliver, and we are happy that your questions came. We are very impressed by the quality of the questions also. And we look towards your questions also as possible indicators or as correction strategies. And I think we could not take four people who were in the queue. So, we will appreciate it if you could just email us your questions, and we will get back to you. And feel free to reach out to us for any other queries you might have. And thank you one and all for taking part in this Con Call. We are happy to be of service, and

Management

Speaking time

Harsh Baweja

Jitendra Srivastava

Moderator

Shreepal Doshi

Kunal Shah

Piran Engineer

Abhijit

Chintan Shah

Avinash Singh

Harshit Toshniwal

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Opening remarks

Shweta Daptardar

Thank you, Shravani. Good morning, everyone. On behalf of Elara Securities, we welcome you all to Q2 FY '26 Earnings Conference Call of REC Limited. From the Esteemed Management, we have with us today, Mr. Jitendra Srivastava – IAS, Chairman and Managing Director, Mr. Harsh Baweja – Director Finance, Mr. T.S.C. Bosh – Director Projects, and Mr. Mohan Lal Kumawat – Executive Director Finance. We express our gratitude towards the esteemed team of REC Limited to provide us the opportunity to host this Conference Call. Without further ado, I now hand over the call to the REC team for Investor Presentation, followed by opening remarks by Mr. Jitendra Srivastava – Chairman and Managing Director, post which we can open the floor for Q&A. Thank you, and over to you, team.

Supreet Pandya

Thank you so much, and good morning, everyone. I shall now take you through to the Investor Presentation for the first Half of FY '25-'26. Just to inform you all, this presentation is also uploaded on the website of REC and is made available on the Stock Exchanges in compliance of the SEBI norms. The presentation is broadly covered into six areas, of which the first is “REC overview”. As you know, REC began its journey in 1969 to develop power infrastructure in rural areas. From thereon, it has graduated many folds. And in 2022, we were accorded the “Maharatna” status, which is the highest status for any public sector entity. And thereafter, we also forayed into the infrastructure, and logistics sector in India, apart from the entire value chain of the power sector. We have the highest domestic credit ratings of AAA, international ratings of “Baa3” & “BBB- ”, at par with the Sovereign Ratings of India. We are a nodal agency to flagship Government of India power sector programs. In fact

On the Profit and Loss side

The key ratios

The yield on loan assets for the half year was 10.06%. The cost of funds at 7.17%. The consequent interest spread was 2.89%, and the NIMs at 3.64%. The return on net worth has increased to 22.14%, and the interest coverage ratio is comfortable, 1.62x. The debt-equity ratio or the gearing ratio of the company has improved to 6.07x.

On the operational performance of REC

We recorded our highest ever half-yearly disbursements of Rs. 1,15,470 crores in this half year, which is a growth of 27% from the corresponding half year of the last financial year. In the Q2 itself, we have disbursed close to almost Rs. 56,000 crores, which is a growth of 18% from the corresponding quarter of the last financial year. The distribution segment has constituted the largest area of disbursement at 69%, followed by conventional generation at 11%, and renewables also of 11%. Consequent to such high disbursements, the outstanding loan assets have increased to Rs. 5,82,167 crores as of 30th September 2025, of which the state sector constitutes 86% of the portfolio and the private sector 14% of the portfolio. On the segment-wise reporting, 27% of our total AUM is in conventional generation, 12% in renewable energy, 8% is into transmission, and distribution constitutes 40% of our total loan book, while the infrastructure and logistics sector constitutes almost 10%. The borrowin

To take you through to the asset quality

Continuously improving the asset quality of REC, the gross NPA have reduced to 1.06%, and the net NPA have reduced to 0.24% as of 30th September 2025. On the NPAs, we have been maintaining a provision coverage ratio of 77%, and on the Stage-1 assets itself, the provision stands at 0.86%, and these Stage-1 assets are roughly 96% of our total asset book. The Stage-2 assets are about 2.77% of the total loan book, wherein we have created a provision of 2.10%. The Stage-3 assets or the NPA assets are currently at 1.06%, where the provision of 77% has been created. We are happy to inform you that as continuous improvement of our asset quality, the Stage-2 assets have been reduced by 52% in this current quarter itself from the last June quarter, where we have recovered a prepayment of Rs. 11,400 crores from Kaleshwaram Irrigation Project, which was a Stage-2 asset till 30th of June 2025. These remaining NPAs or the credit impaired assets are in advanced stages of resolution. We have total 11

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