REC RURAL ELECTRIFICATION CORPORATION Results Analysis

REC - RURAL ELECTRIFICATION CORPORATION Results Analysis
REC - PSU company has done well for itself for year ended 31st March 2009. With an objective of finance and promote rural electrification,
The share of generation segment in the entire loan book has gone up to 35% in FY09 while the share of T&D segment dropped from 63% in FY08 to 57% in FY09.
For the year, the net income rose 40.82% at Rs.4757.17 crore. Its interest outgo was up quite substantially by 40%. What is noteworthy is that REC’s provision for bad and doubtful debts has come down by a whopping 94%. Net profit was up 48% at Rs.1272.08 crore.
Why to invest in REC?
The Govt had launched the ambitious scheme of Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) to electrify rural India with the aim of reaching power to 1.25 lakh villages and 2.34 lakh BPL families. As per the latest estimates, it will miss the target by 50% and the aim is now to electrify more than 63,000 villages in 2009-10. This may or not be done but the bottomline for REC is that there is immense scope. Power is one commodity which will be scarce in India and till that situation prevails, REC has a secure future.
And The company had gone public in Feb 08’ and had issued shares at Rs.105/share. Today it is quoted at around Rs.140 levels. The Govt has a 81.82% stake and institutional holding is 11.72%. thanks