REC Q1 PAT dips 6% YoY to ₹4,193 Cr as ₹911 Cr forex loss masks steady core lending

REC reported consolidated PAT of ₹4,192.76 Cr for Q1 FY27, down 6.1% from ₹4,465.71 Cr a year ago but up 24.2% sequentially from a soft Q4 (₹3,375.08 Cr); standalone PAT was ₹4,149.46 Cr (-6.8% YoY). Revenue from operations was essentially flat at ₹14,434.92 Cr (-2% YoY, -0.9% QoQ) and total income was ₹14,469.49 Cr. The results are unaudited and limited-reviewed.

The year-on-year profit decline is almost entirely an accounting-geography artifact rather than a core deterioration. A ₹911.29 Cr net translation/transaction exchange loss (against just ₹51.47 Cr in Q1 FY26 — an ~₹860 Cr swing) sat on the P&L, but the offsetting hedge gains flowed through OCI: cash-flow-hedge and cost-of-hedging reserves added ~₹4,283 Cr pre-tax, lifting total comprehensive income to ₹7,439.95 Cr, up 3.7x from ₹2,001.55 Cr a year ago. Stripping the forex line, the underlying lending business was broadly stable-to-higher: interest income on loans held near ₹13,888 Cr, and a larger impairment write-back (₹966.58 Cr vs ₹609.79 Cr) further cushioned expenses. On reported ratios margins compressed — net profit margin 28.98% (vs 30.12%) and operating margin 36.26% (vs 38.19%) — with the squeeze sitting on the forex line, not on spreads.

The stock went into the print at ₹361.6, down 0.6% over the past month of trading.

Asset quality improved sharply: the gross credit-impaired assets ratio fell to 0.23% from 1.05% a year ago and net to 0.11% from 0.24%, while the loan book grew to ₹5,89,999.94 Cr and consolidated net worth rose to ₹92,643.52 Cr, taking leverage down to 5.47x from 6.31x. The dominant corporate development is the board-approved (June 28, 2026) draft scheme to merge REC into Power Finance Corporation by absorption — REC is the transferor, at an exchange of 88 PFC shares for every 100 REC shares, with an appointed date of April 1, 2027, subject to regulatory and shareholder approvals; this reframes REC's standalone-listing horizon. Alongside, the board declared a first FY27 interim dividend of ₹4.25/share (record date July 31), appointed Poonam Chauhan as independent director, and continued incorporating power-transmission SPV subsidiaries through the quarter.