Riding high on positive sentiment behind power and PSU stocks, shares of Indian Renewable Energy Development Agency (IREDA) zoomed over 160 percent over its issue price of Rs 32. While some investors might look at booking profits, analysts believe that IREDA is a long-term play and has legs to rally more.
At 10:45 am, IREDA was quoting at Rs 83.35 on the NSE, up 17 percent from previous closed with volumes over 16.3 crore shares. The move came on the back of the state-owned firm floating a retail division for providing loans under PM-KUSUM scheme, Rooftop Solar, and other Business-to-Consumer (B2C) sectors.
Shortly after opening, IREDA’s retail division quickly sanctioned its first loan amounting to Rs 58 crore under KUSUM-B scheme.
IREDA was the first public sector company to hit the capital market in over a year, after Life Insurance Corporation of India’s debut issue in May 2022. The power financier’s asset book is mainly dominated by solar energy (30 percent), followed by wind power (20.9 percent), state utilities (19.2 percent), and hydropower (11.5 percent).
“We are a pure-play green finance company, with an established track record and have a very mature relationship with developers. In the renewable energy space, in the last 6-7 months, they (PFC and REC) have aggressively signed many MoUs and communicated to the developers that they are here,” Das said in an interview to Moneycontrol.
“We have the expertise of dealing with private developers and the expertise in dealing with new and renewable sources. We will definitely continue to be the most preferred lender in the project construction stage,” he added.
Analysts’ views
Apart from subscribing to the IPO for listing gains, analysts had recommended investing long-term in the stock considering GOI initiatives to promote the renewable energy sector. While the stock has very little charting history, as it listed only on November 29, some investors are hopeful that it will hit Rs 100 soon.
With the rally, the valuations have become expensive compared to peers like PFC and REC, but IREDA’s loan book growth prospects are stronger, believe analysts.
According to Nirmal Bang, diversification and expansion in emerging green technologies such as green hydrogen, pumped hydro storage power plants, battery storage value chain, and green energy corridor provide scope for longer-term sustainability of high growth of its loan book.
IREDA recorded a 58 percent CAGR growth in net profit during FY21-FY23. The capital-to-risk weighted asset ratio (CRAR) was 21.22 percent as of March 31, 2022, 18.82 percent as of March 31, 2023, and 20.92 percent as of September 30, 2023.