Lower credit cost to support REC's earnings; NIM to decline 49 bps in FY19

Margins may remain under pressure; liquidity, availability of funds not major concerns

The Rural Electrification Corporation (REC) stock has corrected over 13 per cent over the last five trading sessions. Though the REC is unlikely to feel the sharp hit in terms of liquidity and funding availability like its NBFC peers, weak sentiment has impacted the power financier as well. 

“REC being a government entity, there should not be serious concerns on fund raising. However, margin pressure is likely in the near term as some portion of the borrowings will mature by FY19. But, REC also has pricing power,” says an analyst.

REC will see net interest margin (NIM) pressure in the