Electrical lines coiled on a utility pole (Photographer: Ty Wright/Bloomberg)

Worst Of The Provisioning Concern Behind Us, REC Says

State-owned Rural Electrification Corporation Ltd. is confident of stabilising provisions for bad loans this year.

The power finance company reported a profit of Rs 834.79 crore for the fourth quarter profit, missing analyst estimates on higher provisioning. “We are not seeing higher provisioning in FY19,” Chairman PV Ramesh told BloombergQuint adding around four assets will become standard in next two quarters.

Ramesh said the company will deliver better return ratios than the 13-14 percent return on equity estimated by analysts.

REC paid a dividend of Rs 9.15 per share in financial year 2017-18, resulting in a dividend yield of 8 percent. Rewarding shareholders in form of higher dividends is attainable in the current financial year as well, Ramesh said.

Here are the key highlights:

  • Continue to be one of the most profitable power financing company.
  • Will continue to grow in coming years, NPAs will go down significantly.
  • Lot more capacity generation taking place so massive investment will happen in future.
  • Not seeing higher provisioning in FY19, four assets to become standard in next two quarters.
  • Net NPAs will be around 2 percent In FY19.
  • Robust growth in business amongst peers, NIMs closer to 4 percent, yields are higher than 3 percent.
  • Confident Of Seeing ROA Over 2 percent and ROE of over 13 percent in FY19.
  • Hopeful of maintaining dividend yields at current levels.
  • Will continue to be profitable with robust growth.
  • Will continue to pay higher dividends going forward.