A ₹292 crore provision write-back from TRN Energy and reversals due to SEB upgrades resulted in a negative credit cost of ₹617 crore, partly offset by ₹576 crore in derivative losses.
Asset quality also improved, with gross and net Stage 3 ratios dropping to 1.05% and 0.24%, respectively.Global brokerage firm UBS has a ‘Buy’ rating on the stock but has trimmed the price target to ₹550 per share.
The brokerage said that profit beat was driven by write-backs. Assets under management (AUM) grew 10.4% YoY, while disbursements rose 36.3%. The performance was aided by the resolution of a non-performing asset (NPA). Return ratios remained strong, with RoA at 2.9% and RoE at 23%.
On the other hand, CLSA has a ‘High Conviction Outperform’ rating on REC, with a price target of ₹525, stating Q1FY26 net profit beat estimates by 4%.TRN Energy resolution and provision reversals were key profit drivers. Loan growth stood at 10%, falling short of guidance.
The brokerage said that fair value losses weighed on other income.
CLSA is awaiting management’s comments on the fair value loss.
Morgan Stanley has an ‘Overweight’ rating on REC with a price target of ₹485.
Net profit rose 29% YoY and 5% QoQ, beating estimates by 11%. The strong performance was driven by provision reversals and a beat on net interest income (NII).
NIM came in at 3.9%, above expectations, though sequentially lower due to interest write-backs. Disbursements jumped 36% YoY, primarily led by the distribution segment.
The REC stock ended with gains of 1.38% at ₹405.50 on Thursday. The stock is down 20% on a year-to-date basis.
