REC's Profit Rebounds Sharply as Margins Recover
The power sector financier saw profit surge 24% sequentially, recovering from a weak Q4, even as revenue softened year-on-year.
REC's Q1 FY27 profit rose sharply by 24% from the previous quarter, marking a strong recovery. However, revenue and profit both declined compared to the same period last year.
REC Limited's first-quarter results for FY27 paint a picture of sequential recovery against a backdrop of softer annual comparisons. While both revenue and profit were down from the strong year-ago quarter, a significant quarter-on-quarter profit jump signals a rebound from a weak Q4 finish to the last fiscal year.
The quarter ended June 2026 saw revenue of ₹14,435 crore, a slight 0.9% dip from the March quarter and a 2.6% decline from Q1 FY26. Profit, however, told a different story. At ₹4,193 crore, it surged 24.2% compared to Q4 FY26, though it remained 6.1% lower than the ₹4,466 crore earned in the same quarter last year. This profit rebound was powered by a sharp recovery in net profit margin, which expanded to 29.0% from 23.2% in the prior quarter.
A look at the last five quarters shows the trajectory of this recovery.
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ1 FY27 | PreviousQ4 FY26 | Same quarter LYQ1 FY26 |
|---|---|---|---|
| Revenue (₹ Cr) | 14,434.92YoY -2.6% | 14,563.82 | 14,816.59 |
| Profit (₹ Cr) | 4,192.76YoY -6.1% | 3,375.08 | 4,465.71 |
| Net Profit Margin (%) | 29.0YoY -3.7% | 23.2 | 30.1 |
The table highlights the volatility in profitability over the past year, with Q4 FY26 being a notable low point. The latest quarter's margin, while improved sequentially, is still below the levels seen in the first half of FY26.
Key Points
- The trailing twelve-month (TTM) net profit margin stands at 27.1%, with TTM profit at ₹16,035 crore.
- The stock has delivered strong long-term returns, with a 3-year CAGR of 22.4%, despite a 7.2% decline over the past year.
- REC trades at a significant discount to its industry, with a P/E of 4.9 compared to the sector average of 20.2.
The key question for REC is whether this quarter's margin recovery is sustainable and can translate into growth on both top and bottom lines in the coming quarters.
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ISIN: INE020B01018
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