Power Finance Corporation and REC boards meet Saturday, but the proposed merger faces a major stumbling block: the Centre’s stake could fall below 51% in the combined entity. Analysts estimate that keeping majority control may require a capital infusion of about ₹25,000 crore, even as fiscal pressure rises with a weaker rupee, high inflation, and muted growth in these lenders. Bond covenants also demand government majority ownership, raising questions. The merger is still planned for April 1, 2027.
Power Finance Corporation (PFC) and REC Ltd plan to merge by April 1, 2027, aiming to create a unified platform for financing India’s power sector. The deal has received in-principle approval, with legal and financial advisors appointed. Still, details are being worked out and will need regulatory clearance—while PFC flags potential concerns around RBI norms.
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REC’s consulting arm plans to enter India’s emerging carbon market by operating as an accredited carbon verification agency. The company has invited expressions of interest from agencies to join as empanelled players for validation and verification work tied to compliance and offset mechanisms. The carbon market is expected to launch in 2026, bringing new verification roles for accredited agencies.
REC shares fell over 4% after the company reported a 22% year-on-year drop in Q4 net profit to Rs 3,375 crore. Weak disbursements and modest loan growth weighed on sentiment, but Motilal Oswal kept a ‘Buy’ rating, pointing to attractive valuations and stable spreads as reasons to stay optimistic.
State-run REC reported Q4 consolidated profit of Rs 3,375 crore, down 22% year-on-year, while revenue declined 5%. The company’s sequential performance weakened as expenses rose. Despite the earnings pressure, REC said its loan assets remained strong and declared a final dividend, boosting its total FY26 payout.
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