IREDA shares up 200% from IPO price: Should you sell?
What's the story
The Indian Renewable Energy Development Agency (IREDA) has seen its shares skyrocket over 210% from their initial price of Rs. 32, fueled by optimism surrounding power and PSU stocks.
IREDA, a state-owned company, recently introduced a retail division to offer loans for the PM-KUSUM scheme, Rooftop Solar, and other Business-to-Consumer (B2C) sectors.
Solar energy makes up the largest portion of IREDA's asset book (30%), followed by wind power (20.9%), state utilities (19.2%), and hydropower (11.5%).
Details
IREDA's retail division sanctions first loan under KUSUM-B scheme
Following its debut, IREDA's retail division approved its first loan of Rs. 58 crore under the KUSUM-B scheme.
Pradip Kumar Das, IREDA's Chairman and Managing Director, told Moneycontrol, "We are a pure-play green finance company, with an established track record and have a very mature relationship with developers."
He also mentioned that IREDA will remain the top choice for project construction stage lending.
What Next?
Should you buy, sell, or hold?
Financial experts suggest long-term investment in IREDA due to the Indian government's efforts to boost the renewable energy sector.
Although the stock has limited charting history since its November 29 listing, some investors believe it will continue to reach new heights.
Despite higher valuations compared to competitors like PFC and REC, analysts predict IREDA's loan book growth potential is more robust.
Insights
When should you sell the stock?
According to Zee Business Managing Editor Anil Singhvi, investors should hold shares of IREDA for another six months.
"Don't put this stock based on 'price target,' instead keep it with time target," he recommends.
Nirmal Bang states that diversification and growth in emerging green technologies such as green hydrogen, pumped hydro storage power plants, battery storage value chain, and green energy corridor offer opportunities for long-term sustainability of IREDA's loan book growth.
Facts
What does IREDA do?
IREDA, a miniratna firm under the Ministry of New and Renewable Energy, provides financial loans and services for renewable energy projects and related activities like equipment manufacturing and transmission.
The company reported a 58% CAGR growth in net profit between FY21-FY23 and had a capital-to-risk weighted asset ratio (CRAR) of 20.92% as of September 30, 2023.
As of writing, IREDA's stock traded 13.53% up at Rs. 96.50 on the NSE, hitting the upper circuit at Rs. 102 before retracting.