IREDA's shares list 56% higher than IPO price
The India Renewable Energy Development Agency (IREDA) made a remarkable debut on November 29, with shares listing at a 56.25% premium to the issue price of Rs. 32. Both NSE and BSE opened the stock at Rs. 50, showcasing investor confidence in the company's robust fundamentals and growth prospects. Experts suggest that India's ambitious renewable energy targets place IREDA in an ideal position as the largest green financing NBFC to capitalize on the rapidly expanding sector.
IREDA raises Rs. 2,150 crore through IPO
Through its initial public offering (IPO), the state-run company raised Rs. 2,150.21 crore. The IPO included a fresh issue of 40.31 crore shares valued at Rs. 1,290.13 crore and an offer-for-sale (OFS) of 26.87 crore shares worth Rs. 860.08 crore. Investors enthusiastically responded to the IPO, oversubscribing it by 38.8 times, purchasing a total of 1,827.25 crore equity shares valued at Rs. 58,472.07 crore at the upper price band against the issue size of 47.09 crore.
Financial performance and growth in recent years
Between FY21-23, IREDA experienced a 58% CAGR (Compound Annual Growth Rate) growth in net profit. Total revenue increased by 21.7% to Rs. 3,481.9 crore in FY23 from Rs. 2,859.9 crore in FY22. Profit after tax rose by 36.4% to Rs. 864.62 crore from Rs. 633.52 crore, while Q1 FY24 profit reached Rs. 294.6 crore. For the half-year ending September 2023, the company's revenue surged by 47% to Rs. 2,320 crore and profit grew by 41% to Rs. 579 crore.
IREDA's role in renewable energy financing and portfolio
IREDA is a government-owned enterprise under the Ministry of New and Renewable Energy's administrative control. The company offers financial products and related services for renewable energy projects and other value chain activities, such as equipment manufacturing and transmission, from project conceptualization to post-commissioning. As of June 2023, IREDA's outstanding term loans portfolio stood at Rs. 47,206 crore, reflecting its diverse investments across 23 states and five union territories.
Analysts' views on IREDA's listing premium and future prospects
Prashanth Tapse of Mehta Equities stated, "We believe the listing premium is justified on the back of the company being tagged as a leading PSU player in renewable energy financing and advisory services." Tapse also stated that IREDA could possibly be upgraded from a Mini Ratna to a Navratna company in the near future which will increase its financial autonomy, allowing it to accelerate faster in the competition.
IPO proceeds will strengthen IREDA's capital base
The fresh issue's proceeds will be used to augment IREDA's capital base for future capital requirements and onward lending. Ahead of the listing, the company's shares traded at a premium of Rs. 12.25 in the unlisted market. At the time of writing, IREDA's shares were trading at Rs. 54.80 apiece on NSE, 71.25% up from the IPO price.
