REC's profit falls 6.11% YoY as operating margin narrows again
Costs rose far faster than revenue year on year, while lower interest and tax rates supported the sequential profit rebound.
Filed 24 Jul 2026, 17:26 IST · after market close · REC Ltd (RECLTD)
Key takeaways
- Consolidated net profit fell 6.11% year on year as expenses grew 351.76% while revenue declined 2.05%.
- Operating margin narrowed 6.05 percentage points year on year to 92.28%, marking a second straight quarterly decline.
- Net profit rose 24.23% sequentially as interest expense fell 2.05% and the tax rate declined 3.13 percentage points.
Price around the results
Year-on-year pressure extends into Q1FY27
REC's consolidated net profit declined 6.11% year on year, with profit before tax down 7.03%. Revenue fell 2.05%, but expenses rose 351.76%, driving an 8.08% drop in operating profit. Other income contributed only 0.66% of pre-tax profit, so it did not materially support reported earnings.
Margin decline accelerates after Q4FY26
Operating margin narrowed 6.05 percentage points year on year because costs grew much faster than revenue. It also fell 3.70 percentage points sequentially, following the decline from 98.13% in Q3FY26 to 95.98% in Q4FY26. The lower 20.42% tax rate versus 23.55% in the previous quarter helped limit the sequential earnings decline, while the 2.05% fall in interest expense supported pre-tax profit.
REC remains above the reported sector median
Among 22 Financial Services companies that have reported the same quarter, REC's 92.28% operating margin was 20.06 percentage points above the sector median of 72.22%. The comparison places the company's margin well above the peer midpoint despite its recent two-quarter decline.
No immediate market reaction after the filing
The consolidated results were filed after market close, so there was no immediate market reaction in the reported data. Across the stock's eight recent results reactions, four were positive and four negative, with a median absolute move of 2.08%, indicating that the current history does not show a consistent direction.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹14,435 cr | ₹14,564 cr | -0.89% | -2.05% |
| Other income | ₹35 cr | ₹20 cr | +76.65% | -60.05% |
| Expenses | ₹1,114 cr | ₹585 cr | +90.50% | +351.76% |
| Operating profit | ₹13,321 cr | ₹13,979 cr | -4.71% | -8.08% |
| Operating margin (%) | 92.28% | 95.98% | — | — |
| Interest | ₹8,748 cr | ₹8,931 cr | -2.05% | -2.09% |
| Depreciation | ₹7 cr | ₹7 cr | -1.45% | +1.34% |
| Profit before tax | ₹5,268 cr | ₹4,415 cr | +19.34% | -7.03% |
| Tax | ₹1,076 cr | ₹1,039 cr | +3.47% | -10.42% |
| Net profit | ₹4,193 cr | ₹3,375 cr | +24.23% | -6.11% |
| EPS (₹) | ₹15.92 | ₹12.69 | +25.45% | -6.13% |
Operating margin of 92.28% compares with a Financial Services sector median of 72.22% across 22 peers that have reported Q1FY27.
What to watch
- Whether operating margin recovers from 92.28% after its second straight quarterly decline.
- Whether expenses moderate from the 351.76% year-on-year increase.
- Whether revenue returns to growth after the 2.05% year-on-year decline.