The Indian Renewable Energy Development Agency- IREDA is making waves as it gears up for its IPO, which is set to open today, i.e., November 21. This significant event marks a crucial step in IREDA’s journey to further sustainable energy initiatives.
IREDA IPO: Key Highlights
- IREDA raised Rs 643.26 crore from 58 anchor investors.
- Marquee names like Goldman Sachs and Societe Generale participated.
- The IPO opens on November 21 with a price range of Rs 30-32 per share.
- Fresh issue of 40.31 crore shares and offer-for-sale of 26.87 crore shares.
- IREDA aims to raise Rs 2,150.21 crore for renewable energy projects.
- Strong financials with a 15% CAGR revenue growth and 58% CAGR profit growth from FY21-23.
Indian Renewable Energy Development Agency IPO: Overview
IPO comprises a total of 67.19 crore shares, with a fresh issue of 40.32 crore equity shares by IREDA and an offer-for-sale of 26.88 crore shares by the Government of India. Analysts from various industries have unanimously assigned a ‘Subscribe’ rating to the issue. This endorsement is attributed to the low base, a proven track record of high growth, improved asset quality, and attractive valuations.
IPO Details and Use of Proceeds
IREDA aims to raise Rs 2,150.21 crore through the IPO, setting a price band of Rs 30-32 per share. The offering is open until November 23. The company plans to use the net proceeds to strengthen its capital base, ensuring it meets future capital requirements and continues its strategic lending activities. The listing of equity shares on the stock exchanges is expected to bring additional benefits to IREDA.
IREDA IPO Allocation Details
The state-owned financial institution, in collaboration with merchant bankers, has finalized the allocation of 20,10,19,726 equity shares to anchor investors at a price of Rs 32 per share.
The anchor book saw participation from renowned names, including Goldman Sachs, Integrated Core Strategies (Asia), Societe Generale, GAM Star Emerging Equity, BNP Paribas Arbitrage, Moon Capital Trading, and Copthall Mauritius. Additionally, domestic mutual funds and insurance firms, such as SBI Mutual Fund, HDFC Mutual Fund, ICICI Prudential Mutual Fund, and others, demonstrated confidence in IREDA’s potential.
Indian Renewable Energy Development Agency Financials
IREDA’s robust financial performance is a key highlight. With a remarkable 58 percent CAGR growth in net profit from FY21 to FY23, the company demonstrates financial resilience.
The Capital-to-Risk Weighted Asset Ratio (CRAR) stood at 21.22 percent as of March 31, 2022, reflecting a strong financial position. As of March 31, 2023, and September 30, 2023, the CRAR remained solid at 18.82 percent and 20.92 percent, respectively.
Total revenue witnessed a commendable 21.7 percent increase, reaching Rs 3,481.9 crore in FY23 from Rs 2,859.9 crore in FY22. Profit after tax soared by 36.4 percent, reaching Rs 864.62 crore compared to Rs 633.52 crore in the corresponding period.
The first quarter of FY24 maintained this positive trajectory, with a profit of Rs 294.6 crore.
Should You Invest
When contemplating an investment in IREDA’s IPO, stock market investors should carefully consider both potential advantages and risks. It’s noteworthy that non-performing assets (NPA) may increase due to factors like payment delays, regulatory issues, and financial stress. Past credit rating downgrades, and historical negative cash flows raise additional points of consideration.
Despite IREDA’s strong financial performance and the promising IPO, a neutral stance emphasises the importance of a thorough risk assessment and due diligence. Investors are encouraged to evaluate their risk tolerance and investment goals before making decisions in the dynamic stock market environment.
With strong financials, a growth-oriented approach, and a clear vision, IREDA is poised to make a lasting impact in the sustainable energy sector. Investors and enthusiasts alike are invited to be part of this transformative journey by subscribing to the IPO and contributing to a greener, cleaner future.
Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.