IREDA shares jump 9% to hit fresh record high post Q1

Extending its rally for the fourth straight session, Indian Renewable Energy Development Agency (IREDA) shares gained nearly 9% to hit a fresh record high in early trade on Monday. The stock of the state-owned non-banking financial company (NBFC) surged today after it reported robust earnings in the first quarter of the current fiscal year.

Continuing its gaining streak, IREDA shares opened higher at ₹300.95, up 5.7% against the previous closing level of ₹284.65 on the BSE. In the first hour of trade so far, the PSU stock gained as much as 8.9% to attain a new peak of ₹310, while the market capitalisation rose to ₹80,070 crore.

In four sessions, the multibagger renewable stock has risen nearly 29%, while it zoomed 63% in just 11 sessions of this month. IREDA, which got listed on stock exchanges on November 29, 2023, has risen around 870% against the initial public offering (IPO) price of ₹32 apiece. The counter touched its lowest level of ₹49.99 on its listing on domestic bourses. In the calendar year 2024, the PSU share has jumped 185% as compared to a 43% rise in the BSE PSU index.

IREDA released its Q1 FY25 earnings report post-market hours on Friday, posting a net profit of ₹384 crore during the quarter, up 30% over ₹295 crore in the year-ago period. The revenue from operations grew 32% to ₹1,502 crore as against ₹1,144 crore reported in Q1 FY24.

As of June 30, 2024, the loan book of the renewable sector focused NBFC stood at ₹63,207 crore as against ₹47,207 crore in Q1 FY24, up by 33.8%. The company sanctioned ₹9,210 crore loan during the quarter, up by 387% from ₹1,892 crore in the corresponding period last year. It disbursed loans to the tune of ₹5,326 crore compared to ₹3,173 crore in the same period last year.

On the asset quality front, IREDA’s gross NPA and net NPA improved on a sequential basis. In Q1 FY25, gross NPA stood at 2.19% as against 2.36% at the end of the March quarter, while net NPA improved to 0.95% from 0.99% in Q4 FY24.

Established in 1987, IREDA is an RBI-registered NBFC engaged in promoting, developing and extending financial assistance for setting up projects relating to new and renewable sources of energy.  As per the latest shareholding pattern, the central government holds a 75% stake in the company, while foreign portfolio investors (FPIs) increased their shareholding to 2.7%, compared to 1.36% in the March quarter. On the other hand, domestic mutual funds have reduced their stake in the company to 0.24% at the end of the June quarter, from 0.53% as of March 31, 2024, amid profit booking at higher levels.

Last month, CARE Ratings upgraded IREDA’s ratings for Non-Convertible Debenture (NCD) and Bonds of the company from ‘AA+’ to ‘AAA’, with a stable outlook. This was attributed to consistent growth in the loan book (27% YoY in FY24), along with significant rise in its tangible net worth (TNW) driven by initial public offer (IPO) and healthy internal accruals in FY24, translating to better capitalisation metrics. The rating also factored in the sustained dominant share of the renewable energy (RE) sector, improving asset quality and profitability metrics.

CARE in its report said that ratings also factored in consistent strategic importance of IREDA for the GoI with the entity being majorly owned by the GoI (75% as on March 31, 2024) and it being the nodal agency for promoting, developing and financing RE and energy-efficiency (EE) projects in India. Among others, the memorandum of understanding (MoU) between Ministry of New and Renewable Energy (MNRE) and IREDA for raising of government fully serviced bonds also augured well for the company.

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