REC's Profit Rebounds 24% Sequentially Despite Softer Revenue
The infrastructure financier saw a strong quarterly profit recovery, though annual comparisons show declines in both revenue and profit.
REC's Q1 FY27 profit surged 24.2% from the previous quarter to ₹4,193 crore. Revenue, however, dipped slightly both year-on-year and sequentially.
REC Limited delivered a mixed performance for the quarter ended June 2026, with a strong sequential profit rebound contrasting with softer annual comparisons. Profit after tax surged 24.2% quarter-on-quarter to ₹4,193 crore, a welcome recovery from the previous quarter's low. Revenue, however, declined 2.6% year-on-year and 0.9% sequentially to ₹14,435 crore, reflecting a subdued top-line environment.
The quarterly profit recovery was driven by a significant improvement in net profit margin, which expanded to 29.0% from 23.2% in Q4 FY26. This indicates better profitability management in the latest quarter. Compared to the same period last year, however, the net profit margin contracted by 110 basis points from 30.1%, showing that profitability remains under pressure on an annual basis.
A look at the recent quarterly trajectory reveals the volatility in earnings:
Revenue (₹ Cr)
Profit (₹ Cr)
Net Profit Margin (%)
| Metric | CurrentQ1 FY27 | PreviousQ4 FY26 | Same quarter LYQ1 FY26 |
|---|---|---|---|
| Period Ended | June 2026 | March 2026 | June 2025 |
| 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 |
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 14.7%, despite a 12.2% decline over the past year.
- REC maintains a high return on equity of 20.09% and offers a dividend yield of 6.08%.
Overall, the Q1 results show REC successfully navigating a revenue dip to post a robust sequential profit increase. The company's valuation, trading at a significant discount to the industry with a P/E of 4.9, reflects market caution amidst the mixed earnings trajectory and its high leverage, with a debt-to-equity ratio of 6.05. The focus now shifts to whether this profit recovery can be sustained alongside revenue growth in the coming quarters.
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ISIN: INE020B01018
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