On Monday’s early trade, shares of this NBFC firm, which provides financial assistance for renewable energy (RE) projects, surged 9% reaching a 52-week high price of Rs 310 per share after the company reported a net profit increase of 30% in Q1FY25.
At 11:27 a.m., on Monday’s trade, Indian Renewable Energy Development Agency Ltd (IREDA) shares were trading at Rs 297.15 per share, up 4.39 percent from the previous close price on the stock exchange. The company has a market capitalization of ₹80,337 crore.
IREDA Ltd made a strong market debut on November 29, 2023, with shares listing at a 56.25% premium over the IPO price. The stock was listed at Rs 50 on the BSE, up from the IPO price of Rs 32. In less than 10 months, the stock has surged to over Rs 300 per share.
About the company: Indian Renewable Energy Development Agency Limited (IREDA) is a ‘Navratna’ Government of India Enterprise under the administrative control of the Ministry of New and Renewable Energy (MNRE).
Established in 1987 as a Non-Banking Financial Institution, IREDA is promoting, developing, and providing financial assistance for projects related to new and renewable energy projects.
IREDA has a diverse presence across 23 states and 4 union territories in FY24. Over the past month, its market capitalization has nearly doubled from ₹45,000 crore to ₹80,000 crore. Since its listing, the stock has surged by 400%. Here are some reasons for this growth:
Surge in IREDA stock price: After listing on the stock market, IREDA has experienced significant business growth. The Indian government’s increased focus on the renewable energy sector, where IREDA plays a major role, has greatly contributed to the stock’s impressive rise.
IREDA is expected to see strong loan growth at a CAGR of 25 percent over FY24-26 due to rising demand for renewable energy in the country.
This has attracted significant foreign investment, with foreign portfolio investors (FPIs) increasing their stake in the company to 2.7 percent in the quarter ending June 30, up from 1.36 percent in the previous quarter.
In Q4FY24, IREDA reported a net profit of Rs 337.37 crore, showing a year-on-year growth of 33 percent. Q4 saw the highest loan disbursement, with the loan book growing to Rs 59,698 crore, up 26.81 percent year-on-year.
By the end of FY23-24, IREDA achieved record annual disbursements of Rs 25,089.04 crore, an increase of 15.94 percent compared to the previous financial year’s disbursements of Rs 21,639.21 crore, marking the highest annual loan disbursement in the company’s history.
In the June quarter of FY25, IREDA’s net profit increased by 30%, rising from ₹294.58 crore in Q1FY24 to ₹383.69 crore in Q1FY25. During the same period, revenue grew by 32%, from ₹1,143 crore to ₹1,510 crore.
Additionally, IREDA’s asset quality improved sequentially. Gross NPA at the end of the June quarter was 2.19%, down from 2.36% at the end of the March quarter. Net NPA also slightly improved, decreasing from 0.99% in the March quarter to 0.95% in the June quarter.
The Central Electricity Authority (CEA) estimates that India’s power needs will reach 817 GW by 2030. To meet this demand, the Indian government aims to achieve 500 GW of renewable energy capacity by 2030.
As a result, the government is focusing more on financing and providing incentives for the renewable energy sector. This increased funding creates growth opportunities for companies specializing in green financing, like IREDA.
Future plans of IREDA: IREDA plans to increase its annual disbursements more than fivefold to ₹1.36 lakh crore by the financial year 2030. And company management aims to achieve Maharatna Status by the financial year 2030.
By the end of the financial year 2030, IREDA aims to have a loan book of nearly ₹3.5 lakh crore, which represents a six-fold increase from its financial year 2024 loan book of ₹59,650 crore.
The sector-wise split of IREDA’s outstanding loans includes 27% for Solar Thermal SPV, 18% for wind projects, 12% for hydro projects, 6% for manufacturing projects, and 5% for ethanol projects.
