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REC: Sustains strong momentum - Views on News from Equitymaster

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REC: Sustains strong momentum
May 25, 2011

Rural Electrification Corporation (REC) declared its declared its FY11 (financial year 2011) results. The institution grew its net interest income by 29% YoY (year on year) and profits by 28% YoY.

Performance summary
  • Income from operations grows 20% YoY in 4QFY11 and by 26% YoY in FY11 on the back of a 24% increase in the loan book.
  • Net interest income (NII) grew at a sharper click, rising 29% YoY in FY11, however for the 4QFY11 the NII saw lower growth on higher cost of funds.
  • Disbursements grow by 46% YoY, sanctions by 16% YoY in FY11, a huge contrast from what the cautious, single digit growth seen in the same in 9mFY11.
  • Other income saw a huge spike in the fourth quarter, rising 101% YoY in 4QFY11 and 40% in FY11 on account of forex gains.
  • NIMs improve to 4.4% at the end of FY11 from 4.3% at the end of FY10.
  • Bottomline expands by 28% YoY in FY11 and by 25% YoY in 4QFY11.
  • The company declared a final dividend of Rs 4 per equity share, taking the total dividend for the year to Rs 7.5 per share, implying a dividend yield of 3.6%.
Standalone numbers...
Rs (m) 4QFY10 4QFY11 Change FY10 FY11 Change
Income from operations 17,959 21,581 20.2% 64,309 81,088 26.1%
Interest expended 10,685 13,043 22.1% 39,112 48,510 24.0%
Net Interest Income  7,274 8,538 17.4% 25,197 32,578 29.3%
Net interest margin**       4.3% 4.4%  
Other Income 737 1,483 101.2% 2,768 3,865 39.7%
Operating expense 482 561 16.3% 1,470 1,674 13.9%
Provisions and contingencies - 1   2 2 0.0%
Profit before tax 7,529 9,459 25.6% 26,492 34,766 31.2%
Tax 1,917 2,457 28.1% 6,478 9,067 40.0%
Effective tax rate 25.5% 26.0%   24.5% 26.1%  
Profit after tax/ (loss) 5,612 7,003 24.8% 20,014 25,699 28.4%
Net profit margin (%) 31.2% 32.4%   31.1% 31.7%  
No. of shares (m)       1,148 1,148  
Book value per share (Rs)*         129.5  
P/BV (x)         1.6  

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