REC Ltd (NSE: RECLTD) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Harsh Baweja — Chief Financial Officer
Jitendra Srivastava — Chairman and Managing Director
Mohan Lal Kumawat — Executive Director (Finance)
Analysts:
Unidentified Participant
Shweta Daptardar — Analyst
Avinash Singh — Analyst
Shreya Shivani — Analyst
Chintan Shah — Analyst
Manish Agarwalla — Analyst
Sanket Chheda — Analyst
Sarvesh Gupta — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to REC Ltd Q1FY26 earnings conference call hosted by Alara Securities Private Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand over the conference to Ms. Shweta Duptardar. Thank you. And over to you ma’. Am.
Shweta Daptardar — Analyst
Thank you Huda. Good morning everyone. On behalf of Elara securities we welcome you all to Q1FY26 earnings conference call of REC Limited from the esteemed management we have with us today. Mr. Jeetenbra Srivastava, IAS Chairman and Managing Director Mr. Harsh Bhaveja, Director of Finance Mr. Mohanlal Kumawat, Executive Director of Finance. We express our gratitude towards the esteemed management of REC Ltd to provide us the opportunity today to host this call. Without further ado, I now hand over the call to REC team for presentation post which Mr. CND will take over for his opening remarks and then we can open the floor for Q and A.
Thank you and over to you team.
Harsh Baweja — Chief Financial Officer
Good morning ladies and gentlemen. I shall now take you forward to the investor presentation and the performance highlights for Q1FY 2526. Just to remind you all, this presentation has also been uploaded on the stock exchanges and is also available on the website of recommendations. The presentation has been broadly covered into six areas. REC Overview, Operation Performance, Asset Quality, Borrowing Profile, Financial Highlights and the ESG initiatives taken by REC. On the overview front, as you know that REC was established in 1969. In more than five and a half decades of its journey, REC achieved various milestones with some of them being registered as an MBF RBA in 1998 then floated its maiden IPO in 2008 which was subscribed 27 times.
We got conferred by RBI with IFC status in 2010 and thereon we have been appointed by Government of India for its various flagship Government of India schemes such as RDSF in 2021 and most recently for the rooftop solar scheme in 2024. In 2022 we were conferred the Maharashna status. This is the highest status for any PSU and we also forage into Infrastructure sector in India. And I’m happy to inform you that in 2025 very recently REC became the first Indian public sector NBFC to get ISO 3100018 certificate which is a testimony to our efforts of best in class risk management practices.
REC has various key strengths, some of them being that it has strong fundamentals and a profitable business. It occupies strategic position in the growth and development of the power sector. It has highest domestic credit ratings of AAA from all the four major credit rating agencies in India being crisil, icra, KER and India Ratings. Internationally we are at par with the sovereign ratings of India by both Moody’s and pitch at BA3 and AAA minus respectively. Being a Maharatna company we have strategically placed in Indian power and infrastructure and logistics sectors. We have noodles B fees for various Government of India flagship schemes such as rdss, Sabatia India Rooftop Solar.
We have diversified asset base with robust access to diversified funding sources. We have a healthy asset quality with adequate provision coverage ratio and an experienced management team with sector expertise. We have been funding to entire gamut of power sector value chain be it conventional generation including renewables, transmission and distribution and we have been also funding to infrastructure sector and logistics as well. On the shareholding pattern, the PFC Power Finance Corporation remains to be the largest shareholder of REC with 52.63% equity of total sale of capital. The foreign institutional investors hold 19.16% of our equity as of 30 June 2025.
We have been continuously rewarding our shareholders by high dividend year on year. In the last financial year we have paid a total dividend of 18 rupees per share which was 180% on the basis of rupees 10. Continuing that for the quarter one FY26 the board of Directors have approved an interim dividend. The first interim dividend of rupees 4.6 per share which is 46% of the face value of rupees 10. The annualized earning per share for the quarter one was 67.60 rupees and the book value per share at the 30th of June has reached to 302.30 rupees.
On the awards and accolades front we have been getting various awards in almost all the fields be it corporate governance, Best Funding Solutions, Excellence in Green Finance Reporting, CSR Awards, Technology awards for generative AI implementations, so you name it we have it. On the operational performance front we have made robust sanctions across all disciplines as against the total sanctions of reached more than 3 lakh crore plus in the last year during Q1 itself RDC has sanctioned more than 1 lakh crore worth of projects and renewable energy remains to be the dominant force wherein we have sanctioned more than 20% of the power projects.
The distribution remains to be the largest area with 43% of the total sanctions made in the Q1FY26. Let me take you through the disbursements REC recorded its highest ever quarterly disbursements in Q1FY25 26 wherein we recorded total disbursements of 59,508 crore which was up 36% from the last year. The renewable energy disbursements were 7,233 crore which was up by 35% from the last financial year. On the outstanding loan composition front our loan book has reached 5.84,568 crore as 30 June 2025 which is an increase of 10% from the last financial year. The state sector remains to be the largest area largest focus with 87% of our total loan book and the private sector remaining at 13%.
The re loan book has continuously increased its pace and now the RE loan book stands at 11% of our total loan book at 63,850 which is an increase of 49% from the last financial year. I’ll take you ahead with the asset quality of Alici. We are happy to inform you that during quarter one FY26 REC has resolved one stressed asset I.e. tRM Energy worth almost 1504 crore resulting in gross NPA coming down to 1.05% as of 30th June 2025 and net NPA to 0.24%. The remaining 11 NPAs totaling to about 6147 crores have provision coverage of more than 77% 77.05% to be precise which are being resolved through NCLT.
Just to again reconfirm you all, there are no NPAs in the state sector and we are maintaining an ECL coverage of 0.87% on our standard assets which are which is as per the ECL methodology under India’s accounting norms. In addition to this provision, RFP also has reserves in the form of Statutory reserve as required under RBI act and also as required under Income Tax act totaling to more than 16,000 crores. The borrowing profile of REP remains to be robust. We have highest credit ratings from Modi’s, Fitch and Japan credit rating agencies at par with the Solen ratings of India long term domestic ratings highest with CRISIL IQRA Year led India ratings.
Our total borrowings at 13th June 2025 have reached to 5.8532crore. We have access to multiple sources of funding with a mix of international and domestic sources. To meet the business growth, we are also allowed to raise low cost capital gains fixed exemption bonds. I shall now quickly take you through to the financial highlights of recommendations for the quarter. 1 FY26RP recorded its highest ever quarterly net profit of 4451 crore which was a growth of 29% from the last financial year. The total income reached to 14734 crores again a growth of 13% year on year. The net interest income at 5247 crore.
A growth of 17% from the last financial year. The loan book has reached to its highest ever level at 5.85 lakh crore. The net debt impaired assets have continuously reduced and now is at 0.24%. The net worth of REC. It’s also reached its highest ever level which is 79,688 crores. The capital efficacy ratio of REC stands comfortably at 23.98% as against the requirement of 15% which gives us enough cushion for future growth. On the T ratios front, the yield has improved to 10.08% from 9.99% from the last financial year. Cost of funds at 7.12%. The interest spread is at 2.96%.
The NIMS have improved from 3.64% over last year to 3.74%. The return on net worth has improved to 22.63%. The interest covers ratio stands comfortably at 1.63 times and the debt equity ratio at 6.38 times. The statement of profit and loss and the balance sheet is also available in the presentation as available in the website of rec. I shall now quickly take you through the ESG initiatives taken by rec. The ESG policy was adopted by the board of REC in January 2023. From there on we have achieved various milestones in various areas and most recently we are happy to inform you that the corporate office of REC at Gurugram is being now operated by 100% Green.
Energy. As a stepping stone for India’s energy transition. REC’s lending strategies are tailored to align with India’s commitment to harness clean and green energy sources. Till date REC has sanctioned more than 57,000 megawatt plus of project which has the capability of emission avoidance potential of 65 million tons equivalent of 2.62 billion trees. With this I shall now request Chairman sir to kindly give his opening remarks and also give us guidance for the future outlook. Sir, thank you.
Jitendra Srivastava — Chairman and Managing Director
Thank you so much. Good morning ladies and gentlemen. It gives me great pleasure to interact with all of you today on the aftermath of our first quarter results. As you all know, REC is a Maharatna GUI enterprise and we operate in the power finance and infrastructure financing sectors. Our primary borrowers are the state governments, the state electricity boards, the state power utilities and we also lend to the private sector for all segments of power infrastructure including renewables. During the first quarter of this financial year we have sanctioned over 1 lakh crores which is an equivalent of over 12 billion US dollars.
We have the phenomenal pleasure of recording our highest ever quarterly disbursement of roughly 60,000 crores which is approximately US$7 billion and it represents an increase of roughly 36% on a year on year basis. Our loan book has maintained its growth trajectory and we have reached our highest loan book of 5.85 lakh crores which translates to roughly 70 billion US dollars. We are very confident that our strong. Fundamentals. Will continue to drive a very strong demand in both the power sector, the renewable sector and in the infrastructure sector. And we feel that 12% loan growth can be reasonably achieved in the coming quarters. We are targeting overall this year we are targeting around 12% growth and we are very happy that our first quarter has turned out well. We resolved we are not only just focusing on growth but we are also focusing on the quality of our loan assets. This year we have not had any new addition to our NPAs and our net credit impaired assets have reduced to 0.24% from 0.82% and we are targeting to become a net zero NPA company by the end of this financial year.
Our yield on the loan assets has improved to 10.08% and our spread currently is that roughly 3% 2.96% to be precise. We have among the lowest cost of borrowing Amongst all comparable NBFCs. Our net interest margin which is a key factor of our profitability and our growth and an indicator of our strong fundamentals has improved to 3.74% as against 3.64% last year. Going forward, we are confident that our spread will remain in the region of 2.75 to 3% and are dim in the range of 3.5 to 3.75%. Our capital adequacy ratio is very comfortably. We are very comfortably placed at roughly 24% as against the adequacy norms of 15%.
We have been continuously rewarding our shareholders with timely dividends and plus shares issuers. This quarter we have announced the first interim dividend of 4.6 rupees per share which amounts to a rough dividend payout of approximately 1200 crores. We are very happy with the power sector because the fundamentals of the power sector continue to improve and that augurs very well for the country. In the last ratings of the discoms which we carried out, the high ATNC losses of previous years have come down to 16.3%. Almost 40 out of 63 utilities saw an improvement in their ATNC losses.
The ACS ARR gap has further decreased by 20 PI per unit. The regulators are issuing timely tariff orders. The utilities are engaging in several best practices like digital payments, customer engagements, smart metering and automation, safety and workforce training, renewable energy and sustainability, loss reduction and theft prevention. So we are very happy and we are confident that the power sector will continue to boom. As you are aware, we are the national implementing agency for the RDSS program. We are operating in 19 states out of 34 states. In addition, we are the sole implementing agency of Government of India’s PM Suryagar Muft, Vijli Yojana and we are showing very strong performances there.
Also as on date against the target of one floor customers by 26 by end of 2627 as on date, roughly 56 lakh customers have already applied out of which installations have been completed in roughly 27% of the applicants and so far we have disbursed close to 8,500 crores to these beneficiaries. It gives me great pleasure to announce that REC is the first Indian public sector NBFC to have been conferred with the very prestigious ISO 310002018 award. This has been done for our enterprise wide risk management framework. We are the first Indian public sector NBFC to receive this certification from the British Standards Institution.
We continue to hold the highest domestic rating of AAA and international ratings of Baa3, BBB minus and BBB from Moody’s, Fitch and Japan Credit Rating Agency which is at par with the sovereign rating of India. We going forward we are very very confident that this quarter and the two quarters to come will augur well for rec. I would like to extend my heartfelt gratitude to the employees of rec to my entire team, to my Board of Directors and in the end I would like to thank the Honorable Secretary of Power as well as our honorable Minister of Power for constantly guiding us and all the people in REC for their steadfast support and performance.
I thank you once again for having participated in today’s con call to listen to us about REC’s progress. And I now turn the floor over to you dear ladies and gentlemen for your calls. Thank you so much.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avinash Singh from MK Global Financial Services Ltd. Thank you and over to you.
Avinash Singh
Yeah hi, good morning. Thanks for the opportunity. Two questions. First one if I see your stage one and two PCR based on ECL model there seems to be lowering of PCR. Particularly I noticed one, you know in that your. That electrical and mechanical infrastructure logistics in the state sector. That is where I mean you have close to you know 48, 49,000 or crore and there now the PCR has come nearly zero that it has the element of you know that one of the, you know that project in Telangana that was kind of has moved to stage two perhaps last quarter and now has it moved to a stage one and that is what is reflecting here.
And on the private side if I see renewable energy again there’s the PCR has gone materially lower. So was there some account that was kind of under trouble last quarter and had come back. So these are question on the PCR reduction and the second question if you can help me understand a bit better the underlying mechanics of what is kind of leading to this 576odd crore of you know fair value losses probably on your I, your, your derivatives mark to market. So how exactly the sort of a mechanics working and how it will sort of work going forward.
So these are my two questions. Thank you.
Harsh Baweja
Good morning dear. That is first regarding your expected trade loss there if you see that perhaps you are talking about the infrastructure sector infrastructure core where the provision coverage ratio is 0.07%. So it is just because of these are the government guaranteed loans and they have the less this PD and the ldd. So with that reason their discovery ratio is little lesser than that Similar is the case of renewable energy. There we have the agencies are the better rated agencies and in Those cases the PD and the LGDs are lesser than as expected to in case of other motors.
And if you see that we used to maintain the minimum zero point threshold of ECL provisions on total basis, not on the agency to agency basis. So in case, if you see that against my 0.4% coverage of stage one the average total coverage is around 0.90%. Whereas for stage two where the minimum requirement is 0.5% my total is 0.90% 0.87%. We are well above the minimum threshold limit and the sufficient coverage is available. Your second question was about the derivative losses. Yes, some of the derivative losses are there. That was our 1 lakh hedging. That is with respect to that CHF dollar.
So in case the CHF got stronger against the dollar. So that has given us some losses. But taking those losses into account, our cost of borrowing is still within the. Well, within the limited and much better than the peers. Thank you.
Avinash Singh
Okay. Thank you.
operator
Thank you. The next question is from the line of Shreya Shivani from clsa. Please go ahead.
Shreya Shivani
Yeah. Thank you for the opportunity. I have two questions. First is on the RBI final regulation which has been announced and that becomes applicable from the 1st of October. So is it fair to assume that from the 3rd quarter onwards again your standard asset provision will be on rise. Because every new project that you will disburse will be in the construction phase. And that means the 1% standard asset provision will continue. Now my question is will you pass all of it through the PNL or will you be accounting for it in your reserves, in your net worth? That’s my first question.
Just trying to understand what changes from third quarter onwards for you all. My second question is on the Kaleswaram project of Telangana state. I mean this is a broader question that I read many media articles that there have been some study done by the union government, some committee which said that the project is very unviable and it’s been constructed wrong or something like that. What is our assessment of the same? What do you think is the like a solution on. On the name I understand it’s a government project. So it’s. It may have state government guarantee.
But just want to understand your perspective on this.
Harsh Baweja
Ma’, am, regarding your first question. The new potential guide are to be implemented from 1st of October. And there for the under construction project the provision gets increased from 0.4% to 1%. But that will be taking into effect from the. From prospectively from 1st of the October. So in that case if any amount released on these schemes to be documented from the 1st of October onwards there we will have to make some additional provision as I have just mentioned against the minimum.4% we are already making a provision of around 0.9% so it is not going to make much of a difference for us.
And if you see even if I disburse say around 20,000 crore rupees in next two quarters out of the new disbursement, new sanctions and documented post implementation of this new circular I will have to make an additional provision of 0.5% that cost me around 100 crore rupees. And as regards to your supplementary question regarding that REC is is an NBFC following the India systems. So for the India system if even if I have to make the provision as per the RBA mandate that is not passed through the profit and loss account that that is passed to the impairment results account.
In case in if the provisions as per the RBI direction or RBI guidelines is more than the ecl the amount calculated as per my ecl. So we have still we have a margin left with that. My ECL provisioning is much better than the minimum prescribed by the rbi. But yes we may have to change our guidelines that will evaluate it. And in case if needed then we we may change our guidelines also. But it is not going to make much of the effect. Second, regarding Kaleshwaram, Kaleshwaram projects was one sanctioned in 2021 and 2122. That was the basic premise of the project is that the project was coming from the government.
In case if any of the project is coming from the government we generally teach that the state governments are equally responsible for that. And we had funded this project against the government guarantee as well as the majority provisions. We are ensuring and we are taking on record from the state government that they make the budget provision so that our repayment doesn’t get emperor. If you see the past performance of the the project, the project is progressing. But as far as my repayments are concerned, yes that is there in the phase two for the last one and a half year.
But they are making the payment every quarter every every month. They are not. Slipping it away in. The phase three assets. So we expect that the things will be a little better from now onwards and we expect that they will make the payment and this will be standard assess after sometimes. But till then we are not expecting that this will be slipped into the stage three assets or it will become NP assets. Thank you.
Shreya Shivani
Just one follow up question. Can you also give us the provision coverage ratio for stage one and stage two separately? You’ve given it together.
Harsh Baweja
Phase one it is 0.87% and stage two it is 0.90%.
Shreya Shivani
Thank you so much. Thank you and all the best.
operator
Thank you. The next question is from the line of Abhishek Puri from ubs. Please go ahead. As there is no response I’m taking the next question from Abhijit Breval from Motilal Oswal. Please go ahead.
Unidentified Participant
Yeah. Good morning sir. Am I audible? Yeah, very much so. Two questions from my side as well. Thank you again. So first thing is, I mean this quarter we have done a distribution capex of almost financial distribution capex of almost 18,500 crores. So typically in the past, I mean sanctions or disbursements towards this segment used to be very low. So what is it exactly? If you could just help us understand please.
Harsh Baweja
Sir as far as the distribution is concerned some capex have increased and simultaneously some of the special loans have also been sanctioned to our distribution companies. As far as the regulations are concerned that this comps can take a working capital loan of 35% of their revenue of the preceding year. So these alone have been sanctions within those limits and we are abide by those limits also while funding these projects we take into account that yes, total funding does not exceed that limit. So these funds have been granted against those limits and these are secured against hypothetical assets or the government guarantee.
Unidentified Participant
Are we referring to that same split that we give in the sanctions and dispersants what we call as distribution capex. So these working capital loans which you explained is 35% of the revenue of the receiving layer Basically within the limit of 35% revenue of the preceding year.
Harsh Baweja
Correct? Correct. Correct. Any special loans, if that is being used for the working capital requirement that will fall within that 35% category.
Unidentified Participant
Why call it CAPEX then? Why do we call it capex?
Harsh Baweja
We have mentioned against the distribution scheme sir and against the distribution it covers Capex as well as non Capex also.
Unidentified Participant
Got it sir. This is clear. Thank you so much. The second question I have is around the provisioning in the credit course in this quarter. So while we called out sir in your opening remarks that PRN Energy we have restructured and which is why it has led to a release ECL release of almost 270 crores. But if I look at the credit cost and the provisioning line item in the P and L we have taken a provision write back of almost 6610620 crores. So just trying to understand are there some utilities which were downgraded in the last quarter and have got upgraded in this quarter? Is there something like that? Which has led to some release of provisions.
Harsh Baweja
Yes, it is very much there. Then J2 had increased from C minus to C. So some provision reversals are also there and there were in some of the cases the was little better than as of as compared to the previous quarter. So in that case that there was an LGD change impact. Similarly additional provision has been made for 295 crore rupees. So basically it is on account of the change in the rating from C minus to c of the 10 jet crore and coupled with some of these smaller agency they also got their getting improved.
Unidentified Participant
Got it. So sir, just to kind of summarize this. This almost 620 crores of provision reversal that we saw almost 270 crores was an account of TRN Energy. And the remaining like we explained is 10 Gencos which got their rating upgraded.
Harsh Baweja
From C minus 10 Genco is around 6680 crore rupees. And then COD change impact is around one hundred and six crore rupees. EAD change impact is around two hundred and ninety five crore rupees. So total comes around minus six hundred twenty crore rupees.
Unidentified Participant
This is useful. And the last question that I had was around this rdss. I mean from what I understand and please correct me sir, from what I understand RDSS has a sunset date of March 2026. So I’m just trying to understand how much more would we be able to disburse under RDSS for the next three quarters. And when we say the sunset date is March 2026 for RDSS does it mean that whatever is sanctioned till March 2026 can be disbursed in FY27? Or is it that all disbursements under RDSS will come to a stop from March 2026 onwards?
Harsh Baweja
I’ll reply you in two parts. One is regarding subsidy. So the sunset date for the subsidy is 26. But most of the states have already requested to the central government for extending the timeline for the schemes. And we also expect that it should be increased. The some of the work have already been left. Those awarded works are to be completed. So if that gets extended the subsidy will be released within the timeline. Extended also as far as my loan is concerned I can disburse the loan beyond the timelines also that is not an issue, that is a separate schemes.
And before the closure of the scheme I can always fund those schemes as disbursements.
Unidentified Participant
Got it? This is clear. Thank you very much for patiently answering my questions and I wish you and your team the very best.
Harsh Baweja
Thank you thank you very much.
operator
Thank you. The next question is from the line of Chintan Shah from ICICI Securities. Please go ahead.
Chintan Shah
Yeah, thank you for the opportunity. So sir, one question on the competition front. So now with a steep rate cut of 100 bips over the past four or five months, so how do we see the competition from the banks particularly on the refinancing side for the commission projects and also due to this, do we anticipate some pressure on our yields? So yes, that’s the question.
Harsh Baweja
If you see that during the quarter we have been able to maintain our spread and the NIM as well as the yield also. So we expect that even in cases the yield gets lower in the quarters to come, our cost of moving will also be little lower. So with that we’ll be able to maintain the name and the spread. What was your second question?
Chintan Shah
So that was the question only question. So basically I just wanted to understand more on the competition and will that be impacting any growth and also for now also in terms of our borrowing. So how much of that would be floating means which would get the benefit of the rate cut. And on the yield side, how does the repricing happen? Is it an annual reset or a 2 yearly reset or how does it work?
Harsh Baweja
Actually if you see my loan book, it has around 30. 30% is of three year reset and around 60% is of one year reset. 48. 48%. How much?
Unidentified Speaker
48% one year.
Harsh Baweja
48% is one year reset. And how much is three years? 28% is three years. So even if I change my loan cards today, the benefit will be passed on after completion of one year. In case of three years, it will be passed on after three years. So it is not going to affect my yield as well as my earning on, on this account.
Chintan Shah
So, so whatever the benefit will be passed on that will be compensated by the reduction in the borrowing cost. Is that fair assumption?
Harsh Baweja
Yes, yes, that is what I’m saying. My, as far as my boring books are concerned, 20, almost 20% get matured in, in one year.
Chintan Shah
Okay.
Harsh Baweja
So rest, rest remains the same for the next three years. So the 20 years which I replenish with the new boring will comes at a lower rate.
Chintan Shah
I think so. So yeah, that is very clear. Oh yeah, thank you. That’s it for my.
operator
Thank you. The next question is from the line of Manish Agarwala from Philips Capital. Please go ahead.
Manish Agarwalla
Yeah, thanks for the opportunity. So I have two questions. One is if I see the retainment rates in conventional generation and transmission segment Those have increased and that has been increasing for quite some time. Are these regular repayment or is there any element of prepayment or refinancing there? That’s one.
Harsh Baweja
During this quarter we have got repayment of around 15,000 crore rupees. Of which if you see around 5,000 crore rupees or around 6,000 crore was the prepayment that was mainly of one from the NTBC and second is from the Adanis company. They could build the funds from the bond market. So that is why they have made the prepayment. And as regards to Adani that is regularly they used to turn their portfolio. And sometimes what happens that because of creating headphones for the new sanctions they. Used to prepare to earn. So once they prepared this amount, the headroom was created and they have submitted orations to the sanctions. And we’ll be sanctioning that team shortly. And rest the most of the amount is coming towards the rvpf.
Manish Agarwalla
Yes, yes, yes.
Harsh Baweja
So rest of the amount out of the 15,000 descendants come. That is part of the RVPF schemes. Where the scheme itself that they can make the prepayment giving a three days notice to us. So that that will continue to happen. And every quarter in case the discomforts have the funds available with them. It is better to make the prepayment so that the discoms also become the vigilant and cautious about their borrowings. Similarly, once the prepay the amount to us towards the RVP scheme they can get it again. Or they can take the funds again from us for further disbursement in the in the next quarter.
Manish Agarwalla
Got it. Next question is about your core infrastructure segment. So if I see you know over the last couple of years you have sanctioned 1.4 trillion worth of loan. Whereas the investment has been just 18,000 crore. Just wanted to get your sense. Are these sanctions still valid or these projects are getting delayed? That’s one. And also if you can add that recently have signed MoU with Government of Maharashtra worth1.1 trillion for infra projects. So overall your take on how this is to the move going ahead. That’s it for myself.
Harsh Baweja
As far as infrastructure projects are concerned. The funds are being dispersed on the request of the agencies. And sometimes what happens that because of their cash flow requirements they used to draw the funds at a later date. So these schemes are still valid. And the balance funds in case if they’re required by the agencies except one or two the E& M component schemes. The funds will be released. In all other as regards the MoU with the Maharashtra government That was the movie happens happened with not only with the RES but with most of the agencies. And we expect that some of the schemes whether from the power sector or from the infrastructure sector that will be posed to rec. And we’ll be sanctioning those skills. But that will take little time.
Manish Agarwalla
Got it sir. Thank you very much.
operator
Thank you. The next question is from the line of Sripal Doshi from Aquarius. Please go ahead.
Unidentified Participant
Hi sir. Good morning and thank you for giving me the opportunity. So my first question was on the provision split. So if you could give us the details. Like for example while there has been reversal during the quarter. But as you highlighted to the earlier participant that you know 270 crore was because of the TRN and then because of the other some of the discomfiting upgrade also there was some reversal. But wanted to understand the split of the same. Because you would have provided fresh provisioning towards the disbursement that we have done during the quarter.
Right. So if you could give us some more details of this provision split where in the perim you have seen 616 crore of reversal being the.
Harsh Baweja
Sir, if you can note it down that regular ECL provisioning on the incremental lending is around 295 crore. Then provision reversal is around 605 crore of which the majority from the tangent code where the rating has been increased from minus C to C. Then there is a change in the LGD which has resulted in reversal of 125 crore. Then there is an additional provision made due to delay in COD that is 1106 crore. Then there is a reversal in case of TRN that is a restructured account. That reversal is around 272 crore rupees. And other floor change in the ECL 8 is around 16 crore rupees.
So the total net reversal comes around 620 crore rupees.
Unidentified Participant
Okay. Okay. This LGD change is because of what reason? Like what would have benefited us that broadly this the the rating upgrade would have benefited us there as well or.
Harsh Baweja
Anything else somewhere the progress has happened so that that there are various reasons for there the rating change is one of the reasons.
Unidentified Participant
Okay. Okay. Got it. So the other question. Thank you for that detailed answer. So the other question was on the IBI policy on the provisioning part. So while you give a detailed answer on that as well. But just wanted to understand that will be having for the incremental disbursement will we have a differential pricing wherein we will try to take an impact of this additional provisioning requirement because on the risk adjusted basis, do we want to implement that as a policy or will we still continue with the normalized pricing policy that we have?
Harsh Baweja
I think during the year itself it is not going to make much of the impact on our financials. And ultimately whenever we fix the price, we have to be market competitive. So we see the market and then accordingly we will take the decision.
Unidentified Participant
This is the last question which are the projects incrementally that we are anticipating to get resolved over the next couple of quarters. And you know, how, how is the exposure there and the provisioning there?
Harsh Baweja
We expect that by the FY26 end all the projects, we expect that it will be resolved. If you see that Iran these are at the advanced stage of resolution. Similarly two agencies, Global Metals, Srikanth and Bhavanagar, they are in the very much under discussion with us and some formula will be worked out. And these are already under discussions at an advanced phase. There are five other projects. That is Shri Maheshwar, Konasima, Jasintra, Indbarak, Lenko, Vidarbha. These are under liquidation. And the most of the assets have already been sold. And we have already made 100% provisions against those.
So whatever comes against these schemes will be an income for us. So we expect that we have already reversed 270 crores against CRN. And we further expect that in case if all these assets are resolved, the total reversal would be around 700 to 800 crores during the year itself. That is the minimum which we are expecting.
Unidentified Participant
Got it. That is including this 270 that you have already seen being reversed this quarter.
Harsh Baweja
What do you want to hear from me? It is. It is an additional.
Unidentified Participant
Okay. Okay. Thank you sir. That is very helpful. Thank you. Thank you for answering all the questions and good luck for the next one.
operator
Thank you. The next question is from the line of Sanket Cheddar from DAM Capital. Please go ahead.
Sanket Chheda
Hi sir. Good morning and found us on a good set of numbers. While a couple of my questions got answered, I just had one thing. On growth. You said that we’ll do 12% competitive. Is that 12% conservative guidance in your mind seeing how Q1 has fed basis highest disbursement and also 3% plus quarter on quarter growth. So are we. Are we being conservative there on growth or. We feel that 12% is the max that we will be able to do.
Harsh Baweja
Sir, as far as the growth is concerned this quarter, if you see that we have made one of the best disbursement and that is the highest disbursement during the quarter that has added the 17,000 crore to my loan book from 5,66,000 crore in the Q4FY25. Since my Q4 was flat, had there been little bit growth of even 5,000 or 10,000 crore my growth would have been more than 12%. But still we are keeping a target of 12%. We’ll review it on quarter to quarter basis and this target will try to achieve during the year itself.
And it will be on the yearly basis.
Sanket Chheda
And on margins. If I heard it right, you said that we will be able to maintain the margins at current levels. Right. Because of the benefit of the cost of funding that we going ahead.
Harsh Baweja
Yeah. We’ll be able to maintain the NIM around 3.5% to 3.75% which we are already at 3.74%. And similarly spread would be between 2.75% to 3.
Sanket Chheda
Okay, sure. Those were the decisions.
operator
Thank you. The next question is from the line of Sarvesh Gupta from Maximil Capital. Please go ahead.
Sarvesh Gupta
Good morning, sir. And congratulations on a steady set of numbers. So just one thing on the growth part. So if you see our loan book growth, it has steadily come down from 17, 18% to 10% in this quarter. Now if I look at your numbers, you know your prepayments plus repayments in FY23 used to be only 6.7% of the opening loan book. So that 6% has climbed up to 20% in FY24. And last year, sir, it was 26%. So almost 1/4 of the loan book which was starting in FY25 was not there. So this has been the main reason why we are disbursing more and more.
But the runoff from our loan book is very high. So how do we see this situation? What is the mean reason behind this? And in terms of how we are engaging with our borrowers, can we put some conditions in our term sheets so that this runoff which is very high can be arrested? Because the question now is not related to disbursement but the runoff that is actually the main factor why our loan book is not able to grow at a higher pace than what it was earlier.
Harsh Baweja
In fact, during the conference of Q4, we had explained that wherever the payment was received, there were some certain reasons for that. It is not that because of the pricing, those repayments were made similarly during the quarter. One, except the NTPC which is a triple A company and they had been maintaining their account for last several years with us. They made the prepayment to us. Otherwise rest other accounts are the normal part of the business. It is not displayed of the pricing. We also know how to compete with the market. And that is why we are keeping for the renewable sector is concerned our rate of interest is little at the lower side.
And as regards for others we are very much competitive with our peers. And that is why we have been able to maintain this growth. So if you see during the quarter out of the 15,000 crore rupees, 6,000 crore is around the prepayment. That is a pre repayment rest is on RBPF schemes. As I’ve already explained, RBPF schemes against that the repayment will keep on coming. And once the repayment comes to us, that is if any repayment is made they again get the disbursement in the following quarter. So that is a regular business. And if you see if any of the agency is making prepayment to us, we treat that is a healthy business practice.
Since those are the strong agencies they are able to make the prepayment to us. So we should not be very much afraid from the prepayment that will keep on coming. But yes, it should not affect my business and that is very much within the controls.
Sarvesh Gupta
Simply as I asked on the term sheet itself. Are there some levers that we can use to, you know, not allow so high rate of repayments or repayments.
Harsh Baweja
First of all, I am not agreeing what you said that high rate of prepayment that is not the case. Secondly, yes, I am very much agreed. We should have the conditions in the sanction letters so that even if they want to make the prepayment they should better from that we have a prepayment policies. So in case if they make make the prepayment to us that will be against some of the prepayment charges. So that is a deterrent factor which is available in my terms of the condition.
Sarvesh Gupta
Okay, so that’s all from my side. Thank you.
operator
Thank you. The next question is from the line of Raghu Gamila from Travis Capital. Please go ahead.
Unidentified Participant
Hi, good morning. Most of my questions have been answered. But regarding the net gain loss and the fair value charges, I just want to find out if suppose the rupee devaluates further. Would we see some charges appearing in this quarter and next subsequent quarters or is this a one off thing for this quarter?
Harsh Baweja
Actually if you see in our case, wherever the foreign currency has been raised that is very much protected against the sigil option of hedging. So the seagull option is tested on the day of the settlement so we cannot make any comment as of now. But today, as on today’s date, there is no, nothing to worry. But yes, all will depend on the day when it is tested on the day of the settlement.
Unidentified Participant
So there’s an option, there’s a, there’s a probability that I may get a right back also in the next quarter. Just to understand the nature of these.
Harsh Baweja
Are the federal business which have already been taken place. So there will not be right backs against that and we have the options. Also if we see any kind of threat to any of the legal limits available with us, we also get it increased by paying extra premium for that. That is a regular practice from our side and we keep on watching our portfolio every day and we take the preventive actions also.
Unidentified Participant
Just one last question, please don’t mind me asking and raising one of your competitor’s name. Recently I was on the IRSC and because of their unique structure and things like that, they are looking at a spread of just 100 to 150 basis points on any infrastructure loan. And I heard from the management saying they are ready for giving any infrastructure loan, not just railway linked infrastructure loan. So do you foresee these kind of new companies, PSU companies with similar borrowing costs as ours, being the competition to us in the future?
Harsh Baweja
So I’d like to come in here. Number one, I’d like to say that each PSU and their management and their boards decide what they want to do. And whether they want to price aggressively. Whether they want to have a low spread or whatever. So I would not like to comment on whatever IRFC is planning to do that is entirely within their call. But as far as competition is concerned, number one, let me say that the pool is huge. Whether we are talking about the infrastructure sector, whether we are talking about the power sector, the lender, you and the borrowers and the potential for borrowing is huge, number one. Number two, I would like to also say that our management also if it feels that we need to act in a particular manner, depending on case to case basis, we take individual calls.
So while all of us are operating in the same sphere, I think number one that the pie is fairly large and I don’t think there is too much competition and we also have our own sectoral priorities. While IRFC may foray for some time into infrastructure or power or whatever, ultimately their route sector, the railways will also cry out for their investments and I’m sure the railways would not like them to invest in infrastructure at the expense of investing in railways. So I think we should leave it to the management of the various boards to take these business calls.
The business call to foray from one sector to another depends on a lot of factors. Most of them very, very temperamental. So it is not possible to take a long term view on these points.
Unidentified Participant
As of now we are not. You have been perfect, but we are marketing any threat to a particular position. Right. According to you, we have this.
Harsh Baweja
This quarter we disbursed 60,000 crores. If you look at the disbursements of other companies and specifically if you talk about irfc, you might like to see how much they have disbursed and how much we have disbursed. You might like to take a look at their loan book and take a look at our loan book. I would not like to quote the figures. You’re a smart person. I’m sure you can draw the own math and your own logic from that. If you see that ultimately whatever you earn that is subject to the tax as well as the dividend to be paid to the shareholders. So whatever left, I have to decide whether I have to go for the growth or not. Ultimately I have to remain in the business. If I have to remain in the business, then I need the capital also for the next year’s come. So I don’t know how much name would be sufficient for them to grow at a rate at which they want. So it is their call. But we are working well within our as per the products.
Just to supplement one more point which. Our director Finance has just mentioned, please. Remember whatever NIM or spread that we earn ultimately goes to shore up our capital reserves and increases our reserves and surpluses which further increases our potential to lend to this sector. Now if somebody comes in with a very low spread, you can yourself determine whether they are in for the long term or whether they are a short term player. An entry on a very low margin is. I don’t think it’s a long term strategy. So an indication of a 1% spot spread is the first indication that you are in for the short term. And the borrowers also should take a cue from that and see whether they.
Would like to borrow from a short. Term player or from a long term player.
Unidentified Participant
Fantastic. Your answer is. The only reason why I am forced to ask this question is because of the decrease in the loan book growth from maybe 16 70% to 12%. This is. This is kind of creating all kinds of doubts. If really REC is competitive and is really able to compete with the other players and increase the loan book. So that is the only reason why these doubts are creeping in?
Mohan Lal Kumawat
Let me pose a counter question. Do you expect the power sector to grow at 18% for the next 50 years?
Unidentified Participant
Not just power, but infrastructure. We are into multiple segments.
Mohan Lal Kumawat
Just look at the infra also. What is the general growth of the infrastructure sector? Every sector will in its infancy stages or in its early stages show a spurt of growth. And after some time it becomes, it plateaus, it reduces and then it maintains a very steady growth trajectory. So the see every sector starts out like this. You might have 20% growth in the first quarter phase. Then you might have, it will come down to 18, then it will come down to 15, then it will stabilize at 12% or it will come down to 8% or 10%, depending on the potential for that sector.
So each sector has its own growth trajectory. It will have its own equilibrium. We are in the power sector for the last 50 years. I personally think there was a time when interest rates are very high that saw a lot of borrowers coming in at that time when interest rates are very. Has a very few players. Then gradually the interest the sector consolidated, started delivering interest rates came down. Then once people got assured that there is a stable market and it is not prone to too many risks, that saw the entry of many more players that drove down the interest rate further.
And now the sector, I think, I think it’s still in a growth phase, but somewhere down the line we will hit some equilibrium. And I personally think if you are a long term player, you need to watch out these trends in the market and see how the sector is progressing. So I think we are bullish about the power sector. And the mere fact that so many parties are coming into the power sector is indicative of the fact that they are seeing growth. So we are fairly bullish. Again, I will emphasize, see, the borrower may temporarily get swayed by slightly aggressive interest rates.
Temporarily. But he also realizes, the borrower also realizes that he is also there for the long term. So ultimately he will switch to a long term player.
Unidentified Participant
Okay, that’s really helpful. Thank you so much for the clarification.
operator
Thank you. The next question is from the line of Puneet Bhalani from Acquire. Please go ahead.
Unidentified Participant
Hello. Am I audible?
Jitendra Srivastava
Yeah, please.
Unidentified Participant
Yeah. So is there two questions from my end? Firstly, on the infra book, if I see like, you know, we have grown around 15%, it is higher than the current loan growth. But what are the plans here? Are we planning to grow at a faster pace with, you know, because I think this because private sector capex is kind of muted and banks are also not going to heavily on the capex front. So do we have kind of a mandate or something to grow And I’m assuming that the current mix is broadly it’s mainly government projects right in the current infra book.
Secondly if you could just repeat on the reset periods that you mentioned. I think you mentioned 48% is three year. Oh sorry. 48% is one year reset. On the two year and three year reset. If you could mention what is it? Yeah, that’s all.
Harsh Baweja
As far as the infrastructure sector is concerned as we have already mentioned that we are going. We are very choosy while selecting these projects and in case if the project is self revenue sustainable then we are going for that kind of infrastructure project funding. We are not in hurry for funding the infrastructure projections. Our hands are full with the power sector project. That that is evident from the disbursement taking place during the quarter one we have achieved the highest ever disbursement of 60,000 crore rupees. So we’ll have the same strategy in the next two or three quarters of the year.
So in case if any good projects comes then in that case definitely we’ll fund the powder of this infrastructure project. Otherwise since the the ample opportunity is. Available in the power sector we’ll have. Continued to have the focus on the power sector as regards the loan book is concerned. One year loan book is around 60 60% and three year loan book is 30%.
Unidentified Participant
Got it? Got it. Yes. Thank you for this on the and on the intra book majorly currently of the outstanding book everything is government projects like most of it is government projects. Right.
Harsh Baweja
These are secured against the government guarantee.
Unidentified Participant
Thank you so much.
operator
Thank you. We will take that as a last question for today. I now hand the conference over to the management for their closing comments.
Jitendra Srivastava
Thank you so much for the call today and we thank all the participants for taking their time out to attending this call and we look forward for similar such interactions in the coming quarters. Thank you.
operator
On behalf of Alara Securities Private Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.
Harsh Baweja
Thank you very much.