Rural Elect Corp


(Left this forum) #41

Couldn’t agree more. Adaptive Market is one of its class on own.

This video was too addictive, I couldn’t adapt some of this ideas.


(sivaprakasamp) #42

This is positive news given that the book had stagnated for a few years now.

Disclosure invested


(Bheeshma Sanghani, PhD) #44

(Bheeshma Sanghani, PhD) #45

Interesting article on REC plans going ahead


(Bheeshma Sanghani, PhD) #46

(Bheeshma Sanghani, PhD) #47

Some numbers on the state of discoms and possible path ahhead


(bdas) #48

Can anyone explain what does it mean. Why will REC not submit last quarter result of FY 2018-19?

In compliance of the provisions of Regulation 33(3)(b)(i) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, this is to inform that the Company will submit quarterly/year-to-date standalone financial results for all quarters except for the last quarter of Financial Year 2018-19.

https://www.bseindia.com/corporates/anndet_new.aspx?newsid=99d4c5f6-ca5e-4d0f-ab02-620054b9eb8c


(Pratik) #49

I suppose it implies that REC (as of now) will be giving only consolidated last quarter/year-to-date results for 2018-19. Probably, they will include standalone results of the above in the annual report. I may be wrong in both the above statements.


(bdas) #50

Thank you very much for your response.


(Bheeshma Sanghani, PhD) #51

A good video highlighting solutions for stressed private power assets in india. 15% of RECs loan book is exposed to private players. Most issues in the power sector are operational in nature and revolve around synchronizing the supply chain. Not an expert in the power sector but its an interesting sector and may present good opportunities if some operational issues get resolved


(Bheeshma Sanghani, PhD) #52

A nice movie was made in 2014 on the power situation in kanpur and the helplessness of power discoms. A very humorous movie , Katiyabaaz , is about this power thief who steals power by using a katiya illegally. Do watch for insights into the business.


(Saurabh) #53

@bheeshma: Are you invested in REC ? With stock price around 100 and with div yield around 9-10%, it does look attractive now just looking at the dividends and not about valuations.

What are your thoughts ?


(Bheeshma Sanghani, PhD) #54

Hi @saurabhricha

The dividend yield does look attractive but only because there is a risk that the book value may get eroded in future if the power sector doesnt recover. The key borrowers of REC appear to be in trouble including discoms and the other IPPs they have lent to. At the root of the issue are the 34 power projects that are in varying levels of stress details of which are freely available. There is a high level of uncertainty surrounding the resolution of these assets with no consensus on the direction. The positive is that demand for power is showing a secular growth trend so the long term outlook is ok but with inconsistent availabilty of PPAs and coal one doesnt really know what is in store. With the RBI deadline for resolution fast approaching we will know soon.

My sense is that a win win solution will be crafted soon and there will be no further stress on the book. These power assets are valuable from a long term view and they may change hands but equity is likely to be preserved.

The following link is good to understand the issue in further detail
https://in.finance.yahoo.com/news/national-distribution-company-idea-spices-022632639.html

Best
Bheeshma

Disc - invested from lower levels and have averaged down.


(BAPILL71) #55

Aren’t the credits of State owned companies (read discoms) like sovereign guarantees? Won’t they eventually pay up? SBI and IDBI with much riskier assets are getting better valuations. I am not able to understand why would the market value REC so low


(starpenchal2018) #56

wonderful prediction, you expected this stock valued at 80 to 115, one year ago. you said strong sell :slight_smile: ,


(Vego) #57

Saw the trailer ,Will things ever improve !! wait for stock to erode further and book loss or be happy with dividends, To be or not to be ??


(Bheeshma Sanghani, PhD) #58

Hi @Vego

I am invested in REC and have averaged down and continue to do so.

I think it is a well managed co, despite the prevailing view. Power sector is a capital intensive sector and is going to continue to need low cost funds to finance its growth esp working capital.

Rec enjoys a good credit rating and continues to service its debt on time with no defaults so far. It also has a good extrernal borrowings program which has done well.

It also won the golden peacock award for corporate governance recently, so it has a certain brand equity outside India that enables it to raise funds even in this troubled environment.

As coal production increases with the passage of time and excess supply gets weaned out, hopefully the power cycle will reverse. There are signs of this happening with power cost on the rise.

Best
Bheeshma


(AmitContrarian) #59

Have you guys seen the Debt in this company ? 5 times that of Mcap.
Also Debt/ Equity -

  • Debt to equity: 5.60