REC Ltd Q2 FY27 Results (NSE: RECLTD)
Signal: Earnings declined
The read
The key inflection is deterioration in earnings quality despite a ₹14,736.77 crore total-income rebound from the prior quarter: revenue is down 2.37% YoY for a second straight quarter, finance costs are up 4.29% YoY, and PAT is down 23.38% to ₹3,391.18 crore; the ₹374.52 crore impairment write-back cushions the result but does not offset the weaker operating trajectory.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹14,736.77 Cr | -2.37% | +2.83% |
| Net profit | ₹3,391.18 Cr | -23.38% | |
| EPS | ₹12.88 | -23.38% | |
| EBIT margin | 0% |
P&L walk
Standalone total income fell 2.37% YoY to ₹14,736.77 crore and PAT declined 23.38% to ₹3,391.18 crore, with finance costs up 4.29% and impairment moving from a prior-year expense to a ₹374.52 crore write-back; sequentially, total income rose 2.83% but PAT fell 18.28%.
Key positives
- Loan assets increased to ₹6,16,537.35 crore from ₹5,79,243.08 crore at 31-Mar-2026, indicating continued balance-sheet growth.
- Stage 3 loan assets were broadly stable at ₹1,380.40 crore versus ₹1,384.75 crore at 31-Mar-2026, while Stage 3 provisioning coverage remained high at 51.12%.
- EPS of ₹12.88 declined 23.38% YoY, exactly tracking the 23.38% PAT decline and providing no evidence of incremental equity dilution.
- The company declared a second interim dividend of ₹3.50 per equity share for FY27.
Key concerns
- Total income declined 2.37% YoY to ₹14,736.77 crore, extending the revenue slowdown into a second consecutive quarter.
- Finance costs increased 4.29% YoY to ₹9,522.98 crore even as total income declined 2.37% YoY.
- PAT fell 23.38% YoY to ₹3,391.18 crore and 18.28% QoQ despite a ₹374.52 crore impairment write-back.
- Operating cash flow was negative ₹17,586.30 crore in H1FY27 versus negative ₹2,966.84 crore in H1FY26, reflecting heavy cash absorption by loan assets.
- The proposed merger with Power Finance Corporation remains subject to shareholder, creditor, MCA and other statutory or regulatory approvals.
Research and educational content only. Not investment advice.