REC's Q2 profit drops 21.23% as expenses surge
Revenue fell 1.00% YoY, while operating margin lost 4.13 percentage points and interest expense rose 4.29%.
Filed 26 Oct 2026, 19:06 IST · after market close · REC Ltd (RECLTD)
Key takeaways
- Consolidated net profit fell -21.23% YoY to Rs 3,477.73 cr as operating profit declined and interest expense rose +4.29%.
- Operating margin narrowed 4.13 percentage points YoY to 92.73% because expenses grew +129.05% while revenue fell -1.00%.
- Interest expense rose +8.85% QoQ and the tax rate increased 0.38 percentage points, while other income was only 0.23% of profit before tax.
Price around the results
Profit fell despite sequential revenue growth
REC reported consolidated revenue growth of +3.92% QoQ, but operating profit declined -0.56% and net profit fell -17.05%. Year on year, revenue declined -1.00% while net profit dropped -21.23%, showing that the earnings pressure was not just a sequential effect. Results were filed after market close.
Higher expenses and interest drove the margin squeeze
Expenses grew +144.01% QoQ against revenue growth of +3.92%, narrowing operating margin by 4.17 percentage points. The year-on-year comparison is similar: expenses rose +129.05% while revenue fell -1.00%, taking margin down 4.13 percentage points. Interest expense also increased +8.85% QoQ and +4.29% YoY, while the tax rate rose 0.38 percentage points QoQ and 0.36 percentage points YoY.
Margin remains above peers after a volatile trend
Operating margin declined from 96.90% in Q1FY27 to 92.73% in Q2FY27, after recovering from 91.55% in Q4FY26; the longer trend is therefore a rebound followed by a renewed decline, not a straight quarterly fall. REC's margin was 28.59 percentage points above the 64.14% median for the 29 Financial Services peers that had reported. Other income contributed only 0.23% of profit before tax, so the quarter's earnings were not materially supported by that line.
No immediate market reaction was available
The stock's recent reaction to results has been negative more often than positive, with five declines and three rises across eight instances. The median absolute move was 1.81%, providing the relevant historical context once the post-market filing is reflected in trading.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹15,000 cr | ₹14,435 cr | +3.92% | -1.00% |
| Other income | ₹10 cr | ₹35 cr | -70.99% | +3.30% |
| Expenses | ₹1,091 cr | ₹447 cr | +144.01% | +129.05% |
| Operating profit | ₹13,910 cr | ₹13,988 cr | -0.56% | -5.22% |
| Operating margin (%) | 92.73% | 96.90% | — | — |
| Interest | ₹9,522 cr | ₹8,748 cr | +8.85% | +4.29% |
| Depreciation | ₹7 cr | ₹7 cr | -0.74% | +1.20% |
| Profit before tax | ₹4,391 cr | ₹5,268 cr | -16.65% | -20.87% |
| Tax | ₹913 cr | ₹1,076 cr | -15.07% | -19.45% |
| Net profit | ₹3,478 cr | ₹4,193 cr | -17.05% | -21.23% |
| EPS (₹) | ₹13.21 | ₹15.92 | -17.02% | -21.23% |
Operating margin of 92.73% compares with a Financial Services sector median of 64.14% across 29 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -3.92% | -3.91% |
Volume on the results session was 1.76× its 20-day average.
What to watch
- Whether operating margin recovers from 92.73% after the 4.13 percentage-point YoY decline.
- Whether expenses moderate from +129.05% YoY growth while revenue was -1.00%.
- Whether interest expense growth eases from +8.85% QoQ.