Rural Electrification Corp - Operationally in line; forex losses jump sharply - Ambit

Rural Electrification Corporation's (REC) 1QFY14 net profit at Rs11.5bn increased 31% YoY and 20% QoQ, 6% above our estimates. The reported gross NPAs remained stable at 0.37%, with no incremental slippages during the quarter. Loans to the transmission and distribution sector accounted for ~52% of the disbursements during the quarter, which led to disbursements growth of 21% YoY and loan book growth of 25% YoY. NIMs increased ~43bps YoY and 24bps QoQ primarily due to a ~50bps increase in lending yields on both YoY and QoQ basis. The INR depreciation during the quarter led to higher forex losses at Rs6.9bn (vs 1.6bn a quarter ago).

We maintain our target price of Rs147/share (0.9x adjusted BVPS).

Source : Equity Bulls

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