IREDA Shares Surge 4% as Shareholders Approve ₹5,000 Crore Fundraising via QIP
IREDA Shares : Shares of Indian Renewable Energy Development Agency (IREDA) jumped 4% on February 25, reaching ₹178 per share, after the company’s shareholders gave the green light to raise up to ₹5,000 crore through a Qualified Institutional Placement (QIP). The approval came during the 22nd Extraordinary General Meeting (EGM), where all resolutions were passed as special resolutions with the required majority.
IREDA’s Growth Plans and Fundraising Strategy
IREDA’s latest fundraising move is expected to be conducted in one or multiple tranches and will lead to a dilution of the Government of India’s stake by up to 7% post-issue. This step aligns with the company’s strategy to strengthen its capital base and expand financing for India’s renewable energy sector.
During the EGM, Pradip Kumar Das, Chairman and Managing Director (CMD) of IREDA, emphasized that the capital raised through QIP will enhance the company’s ability to finance green energy projects, accelerate loan book growth, and contribute significantly to India’s clean energy ambitions.
Inclusion in F&O Segment to Boost Trading Opportunities
In another positive development for investors, the National Stock Exchange (NSE) has announced the inclusion of IREDA in the Futures and Options (F&O) segment starting from the March series. This will allow traders to engage in derivative contracts for IREDA stock from February 28, when the new series begins trading. The February F&O series is set to expire on February 27.
The inclusion in F&O is a significant milestone for the company, as it will lead to higher liquidity, increased participation from institutional investors, and improved price discovery for IREDA shares.
Financial Performance: Strengths and Challenges
Despite the positive momentum from the QIP approval and F&O inclusion, IREDA’s financials indicate a mixed performance in the third quarter.
The company reported a 39% year-on-year (YoY) growth in Net Interest Income (NII), while its net profit surged 27% YoY to ₹425.4 crore. However, asset quality remains a concern as Gross Non-Performing Assets (NPAs) increased by 30.4% quarter-on-quarter (QoQ), and net NPAs surged 53.75% sequentially to ₹1,024 crore.
Stock Performance and Market Sentiment
IREDA’s stock has faced challenges in 2024, with a year-to-date decline of over 20%, underperforming the Nifty 50 index, which has dropped by 5% in the same period. Despite the current weakness, the recent developments could potentially trigger renewed investor interest in the stock.
Key Financial Ratios & Market Data
Below is a snapshot of IREDA’s key financial metrics:
| Metric | Value |
|---|---|
| Market Cap | ₹46,794 Cr. |
| Current Price | ₹174 |
| 52-Week High / Low | ₹310 / ₹121 |
| Stock P/E | 30.5 |
| Book Value | ₹34.7 |
| Dividend Yield | 0.00% |
| Return on Capital Employed (ROCE) | 9.30% |
| Return on Equity (ROE) | 17.3% |
| Face Value | ₹10.0 |
| Promoter Holding | 75.0% |
| Debt-to-Equity Ratio | 5.85 |
| Price-to-Earnings Ratio | 30.5 |
| Pledged Percentage | 0.00% |
| Quarter-on-Quarter (QoQ) Profit Growth | 9.70% |
| Quarterly Profit Variation | 26.8% |
| Industry P/E | 19.6 |
| Graham Number | ₹66.8 |
| Intrinsic Value | ₹72.8 |
| Relative Strength Index (RSI) | 40.3 |
| Earnings Per Share (EPS) | ₹5.71 |
| Total Equity Shares | 269 Cr. |
| PEG Ratio | 0.90 |
| 200-Day Moving Average (DMA) | ₹195 |
| Free Cash Flow (3-Year) | ₹-28,745 Cr. |
| Free Cash Flow (Latest) | ₹-11,123 Cr. |
| Total Debt | ₹54,639 Cr. |
What Lies Ahead for IREDA?
While the stock has seen a dip in recent months, the QIP approval and F&O inclusion could act as key triggers for a rebound. The additional capital will allow IREDA to scale its renewable energy financing, a sector that is expected to see strong growth amid India’s push towards clean energy.
However, investors should also be cautious about the high debt levels and increasing NPAs, which remain potential risks. The stock’s RSI at 40.3 suggests it is approaching oversold territory, which might attract bargain hunters in the market.
Conclusion
IREDA’s stock witnessed a 4% rally following the approval of a ₹5,000 crore QIP and its inclusion in the NSE F&O segment. While the company’s growth prospects in green energy financing remain strong, asset quality concerns and stock underperformance in 2024 may weigh on investor sentiment.
For long-term investors, the recent developments could mark the beginning of a new growth phase for IREDA, but monitoring financial stability and asset quality will be crucial in the coming quarters.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.