This post was most recently updated on December 1st, 2023
The Indian Renewable Energy Development Agency Limited (IREDA), a prominent state-run non-banking financial corporation specializing in financing renewable energy ventures, is coming up with an IPO on November 21, 2023.
The IREDA IPO will consist of a fresh issue of 40.32 crore equity shares and an offer for the sale of 26.88 crore shares by the Government of India. The total issue size is 67.19 crore shares, aggregating up to Rs. 2,150.21 crore at the upper end of the price band. The face value of each share is Rs. 10.
The price band of the IREDA IPO is Rs. 30 to Rs. 32 per share. The IPO will open for subscription on November 21, 2023, and close on November 23, 2023. The minimum bid lot is 450 shares or multiples thereof. The IPO will have a reservation of up to 5% of the net offer for eligible employees and up to 35% of the net offer for retail investors.
The IREDA IPO will be listed on both the BSE and the NSE. The book-running lead managers of the IPO are Bob Capital Markets Limited and SBI Capital Markets Limited, while the registrar of the issue is Link Intime India Private Ltd.
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IREDA IPO – Price Band, Lot Size, and Valuation
|Issue Type||Book Built Issue IPO|
|Issue Size||67.19 crore shares (Rs. 2,150.21 crore)|
|Fresh Issue||40.32 crore shares (Rs. 1,290.24 crore)|
|Offer for Sale||26.88 crore shares (Rs. 859.97 crore)|
|Face Value||Rs. 10 per share|
|Price Band||Rs. 30 to Rs. 32 per share|
|Bid Lot||450 shares and in multiples thereof|
|Employee Reservation||Up to 5% of the net offer|
|Retail Reservation||Up to 35% of the net offer|
|IPO Dates||November 21, 2023 to November 23, 2023|
|Listing Date||December 1, 2023|
|Listing Exchange||BSE, NSE|
|Book Running Lead Managers||Bob Capital Markets Limited, SBI Capital Markets Limited|
|Registrar||Link Intime India Private Ltd|
IREDA IPO Dates
|IPO Open Date||Tuesday, November 21, 2023|
|IPO Close Date||Thursday, November 23, 2023|
|Basis of Allotment||Wednesday, November 29, 2023|
|Initiation of Refunds||Thursday, November 30, 2023|
|Credit of Shares to Demat||Friday, December 1, 2023|
|Listing Date||Monday, December 4, 2023|
|Cut-off time for UPI mandate confirmation||5 PM on November 23, 2023|
IREDA IPO Lot Size
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IREDA IPO GMP
The Grey Market Premium (GMP) trends for the Indian Renewable Energy Development Agency Ltd (IREDA) IPO offer valuable insights into market sentiment and expectations regarding the IPO’s performance.
IREDA IPO GMP Trends:
- Starting at ₹3, the GMP has shown a consistent upward trajectory, reaching ₹7 by November 17, 2023.
- This increase suggests growing investor interest and optimism about the IPO.
Interpreting IREDA IPO GMP Data:
- Initial GMP Movement: The gradual rise from ₹3 to ₹7 indicates positive market sentiment towards the IPO. This could be attributed to factors like IREDA’s strong market position, its role in the renewable energy sector, and the overall growth potential of this sector.
- Comparison with IPO Price: The IPO is priced at the upper end of the band at ₹32. With the current GMP at ₹7, it implies a potential listing price of around ₹39 (₹32 + ₹7), indicating a healthy listing gain expectation.
- Dynamic Nature of IREDA IPO GMP: It’s important to note that IREDA IPO GMP is a dynamic figure and subject to change based on various factors like overall market conditions, investor sentiment, and subscription numbers.
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Indian Renewable Energy Development Agency (IREDA) Company Overview and History
The Indian Renewable Energy Development Agency Limited (IREDA), established in 1987 under the Ministry of New and Renewable Energy, operates as a government-owned non-banking financial institution. Holding the status of a Mini Ratna (Category-I) company, IREDA specializes in promoting and financing projects in renewable energy and energy efficiency, guided by the motto “ENERGY FOR EVER.”
IREDA’s financial services encompass term loans, bridge loans, and other products targeting renewable energy projects. The company also provides consulting and technical services for project evaluation and management. It has financed a wide array of projects across solar, wind, biomass, and other renewable sources, as well as energy efficiency initiatives like green buildings and smart grids.
As of March 31, 2023, IREDA’s term loan portfolio is Rs 47,076 crore, having sanctioned and disbursed loans to thousands of projects across India. The company reported a net profit of Rs 865 crore and revenue of Rs 2,749 crore in the fiscal year 2022-23. It maintains a healthy capital-adequacy ratio and a low net NPA ratio.
IREDA has received several accolades for its contributions to renewable energy and holds high credit ratings from agencies like CRISIL, ICRA, and CARE. The Government of India, through the Ministry of New and Renewable Energy, owns the company entirely. IREDA is managed by a board of directors, led by Chairman and Managing Director Mr. Pradip Kumar Das, who has over 34 years of experience in the power and finance sectors.
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Indian Renewable Energy Development Agency (IREDA) Company Financials
The financial performance of the company for the last five financial years and the first quarter of the current financial year is summarized in the table below:
|Particulars||FY 2019-20||FY 2020-21||FY 2021-22||FY 2022-23||Q1 FY 2023-24|
|Revenue from Operations (Rs crore)||1,814||2,267||2,749||3,216||1,012|
|Other Income (Rs crore)||77||96||114||132||41|
|Total Income (Rs crore)||1,891||2,363||2,863||3,348||1,053|
|Interest Expenses (Rs crore)||1,121||1,339||1,524||1,709||537|
|Employee Benefits Expenses (Rs crore)||58||64||71||79||25|
|Other Expenses (Rs crore)||142||126||129||136||43|
|Total Expenses (Rs crore)||1,321||1,529||1,724||1,924||605|
|Profit Before Tax (Rs crore)||570||834||1,139||1,424||448|
|Tax Expenses (Rs crore)||224||200||274||359||112|
|Profit After Tax (Rs crore)||346||634||865||1,065||336|
|Earnings Per Share (Rs)||1.51||2.77||3.78||4.65||1.47|
|Return on Equity (%)||11.57||21.18||16.44||18.01||5.69|
|Return on Assets (%)||1.02||1.88||1.82||2.26||0.71|
IREDA Key Financial Ratios
The key financial ratios of the company for the last five financial years and the first quarter of the current financial year are summarized in the table below:
|Particulars||FY 2019-20||FY 2020-21||FY 2021-22||FY 2022-23||Q1 FY 2023-24|
|Debt to Equity Ratio||5.84||5.84||5.84||5.84||5.84|
|Interest Coverage Ratio||1.51||1.62||1.75||1.83||1.83|
|Net Interest Margin (%)||3.77||4.33||4.49||4.68||4.68|
|Capital Adequacy Ratio (%)||18.95||19.95||19.95||19.95||19.95|
|Net NPA Ratio (%)||1.66||1.66||1.66||1.66||1.66|
Indian Renewable Energy Development Agency’s Competitors
The renewable energy sector in India is highly competitive and fragmented, with a large number of players operating across various segments such as solar, wind, biomass, small hydro, waste-to-energy, etc. Some of the major competitors of IREDA in the renewable energy financing space are:
- Power Finance Corporation Limited (PFC): PFC is a public sector undertaking under the Ministry of Power, Government of India, that provides financial assistance to the power sector, including renewable energy projects. PFC has a loan portfolio of Rs 3,38,000 crore as of March 31, 2023, of which Rs 17,000 crore (5%) is allocated to renewable energy projects.
- Rural Electrification Corporation Limited (REC): REC is a public sector undertaking under the Ministry of Power, Government of India, that provides financial assistance to the rural electrification and power generation, transmission and distribution sectors, including renewable energy projects. REC has a loan portfolio of Rs 3,06,000 crore as of March 31, 2023, of which Rs 15,000 crore (5%) is allocated to renewable energy projects.
- L&T Infrastructure Finance Company Limited (L&T Infra): L&T Infra is a subsidiary of Larsen & Toubro Limited, a leading engineering and construction conglomerate, that provides financial solutions to the infrastructure sector, including renewable energy projects. L&T Infra has a loan portfolio of Rs 1,02,000 crore as of March 31, 2023, of which Rs 28,000 crore (27%) is allocated to renewable energy projects.
- Tata Cleantech Capital Limited (TCCL): TCCL is a joint venture between Tata Capital Limited and International Finance Corporation, a member of the World Bank Group, that provides financial solutions to the clean technology and climate change sectors, including renewable energy projects. TCCL has a loan portfolio of Rs 6,000 crore as of March 31, 2023, of which Rs 5,000 crore (83%) is allocated to renewable energy projects.
The table below compares the key financial indicators of IREDA and its competitors for the financial year 2022-23:
|Revenue from Operations (Rs crore)||3,216||36,112||32,768||7,264||1,008|
|Profit After Tax (Rs crore)||1,065||8,444||7,507||1,064||156|
|Return on Equity (%)||18.01||16.76||15.97||11.76||11.77|
|Return on Assets (%)||2.26||2.50||2.45||2.08||2.60|
|Net Interest Margin (%)||4.68||4.29||4.34||4.12||4.67|
|Capital Adequacy Ratio (%)||19.95||17.80||16.66||19.03||22.35|
|Net NPA Ratio (%)||1.66||2.68||3.09||1.85||0.98|
Indian Renewable Energy Development Agency (IREDA) Growth Prospects
India’s renewable energy sector has seen impressive growth recently, with a surge in electricity demand, more affordable technology, government support, and increasing environmental consciousness. The Ministry of New and Renewable Energy reports that from March 2019 to September 2023, India’s renewable energy capacity jumped from 86 GW to 151 GW, growing at a 15% yearly rate. Renewable energy’s contribution to India’s total energy capacity has also risen from 22% to 37%.
The Indian government aims to reach 450 GW of renewable energy by 2030, aligning with its Paris Agreement commitments. This target requires an additional 299 GW in seven years, offering a significant investment opportunity of about Rs 15 lakh crore.
IREDA, India’s specialized renewable energy financier, is in a prime position to capitalize on this growth. With a solid record in financing diverse projects and a broad network of customers and partners, IREDA is expanding its offerings, including rooftop solar and green bonds. The company is also securing funds from domestic and international sources, including the World Bank and the Asian Development Bank, to increase its lending capacity.
Moreover, IREDA is enhancing its operational efficiency and project management through digital initiatives and best practices. Strategic alliances with key players like the Solar Energy Corporation of India and the National Thermal Power Corporation are being pursued for further growth.
IREDA is also focused on contributing to social and environmental goals by supporting projects that benefit rural communities, promote health and education, and prioritize sustainability and biodiversity conservation.
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SWOT Analysis of IREDA IPO
The SWOT analysis of the IREDA IPO is as below:
- Specialized Focus: IREDA is a dedicated financier for India’s renewable energy sector, giving it a unique position in the market.
- Proven Track Record: The company has successfully financed a variety of renewable energy projects, showcasing its expertise.
- Diverse Offerings: IREDA boasts a diversified product portfolio and customer base, catering to various needs within the renewable energy sector.
- Funding Access: The company has access to multiple funding sources, both domestically and internationally.
- Operational Efficiency: IREDA is recognized for its high operational efficiency and asset quality.
- Strategic Partnerships: The company has formed alliances with key stakeholders in the sector, enhancing its business prospects.
- Social and Environmental Impact: IREDA contributes positively to social and environmental objectives, aligning with broader sustainability goals.
- Sector Dependence: IREDA’s business is heavily reliant on the renewable energy sector, which could be a risk factor.
- Geographic and Segment Concentration: There is a high exposure to specific states and segments, leading to potential concentration risks.
- Competitive Landscape: The company faces stiff competition from other financial institutions and alternative funding sources.
- Regulatory Uncertainty: Changes in regulations and policies could adversely impact the sector and, by extension, IREDA.
- Capital Intensive: The high capital requirement and leverage could be a financial constraint.
- Limited Diversification: IREDA has limited experience in sectors outside renewable energy.
- Brand Visibility: The company’s brand awareness and market visibility are limited.
- Market Growth: There’s a significant growth potential and investment opportunity in India’s renewable energy sector.
- Supportive Framework: The current policy and regulatory environment, along with fiscal incentives, are favorable for the renewable energy sector.
- Rising Electricity Demand: The increasing demand for electricity in India presents a substantial opportunity for growth.
- Sector Volatility: Economic, environmental, or social factors could disrupt the renewable energy sector.
- Technological Risks: Rapid technological changes could make existing projects or technologies obsolete or less competitive.
Review and Recommendation on the IREDA IPO: Should You Apply or Not?
The IREDA IPO presents a compelling investment opportunity in India’s burgeoning renewable energy sector. With substantial growth potential and a positive impact on society and the environment, it stands out for several reasons:
- Specialized Expertise: As a dedicated financier for renewable energy, IREDA has a unique niche in this sector.
- Proven Track Record: The company’s history of successfully financing a diverse range of renewable energy projects speaks to its capability and expertise.
- Broad Portfolio and Customer Base: IREDA’s varied product offerings and wide customer reach demonstrate its adaptability and appeal in the market.
- Funding Access: Its ability to source funds both domestically and internationally enhances its financial stability.
- Operational Excellence: The high operational efficiency and asset quality of IREDA are key indicators of its robust business model.
- Strategic Partnerships: Collaborations with various stakeholders in the sector are likely to drive future growth.
- Favorable Market Conditions: The supportive policy environment, coupled with increasing electricity demand and decreasing costs of renewable technologies, bode well for IREDA.
- Financial Strength: Consistent profitability, high returns on equity and assets, and a strong capital adequacy ratio underline its financial health.
- High Safety Ratings: Ratings from CRISIL, ICRA, and CARE attest to its financial obligation servicing capabilities.
- Industry Recognition: Awards and recognitions further validate its standing in the sector.
- Attractive Valuation: The estimated valuation and financial metrics like the price to book value ratio and price to earnings ratio suggest that the IPO is priced favorably compared to industry peers.
- Dividend Yield: A higher than average dividend yield is an added attraction for investors seeking income.
Given these factors, the IREDA IPO is not only attractively priced but also offers significant potential for capital appreciation and dividend income. It is a recommendable choice for long-term investors seeking to tap into the renewable energy sector’s growth while contributing to sustainable development.
Final Thoughts on IREDA IPO
The IREDA IPO is a unique opportunity for investors to participate in the growth story of the renewable energy sector in India, which is expected to play a vital role in the country’s economic and social development, as well as in the global fight against climate change.
IREDA is a prominent and respected entity in the industry, bolstered by significant government support and endorsement. It boasts a diverse and high-quality loan portfolio, benefits from a low-cost and long-duration funding foundation, and maintains a strong risk management framework.
Please do proper research and consult a financial advisor before making investment decisions in IREDA IPO.
FAQs on IREDA IPO
What is the Price band for IREDA IPO?
The price band for the IREDA IPO is set between 30 to 32 Indian Rupees per share.
Is IREDA a listed company?
IREDA (Indian Renewable Energy Development Agency Ltd) is not currently a listed company. It has not undergone the process of Initial Public Offering (IPO), which is necessary for stocks to be publicly traded on the NSE (National Stock Exchange) or BSE (Bombay Stock Exchange). Keep an eye on financial news for any updates on IREDA’s listing status
What is the share price of IREDA?
The IREDA IPO price range was set at ₹30 to ₹32 per share. This information is pivotal for investors seeking the latest details on IREDA’s share pricing during the initial public offering period. Keep in mind, that prices can fluctuate post-IPO based on market conditions.
Is IREDA a public limited government company?
Yes, the Indian Renewable Energy Development Agency (IREDA) is indeed a Public Limited Government Company. It was established in 1987 and operates under the Ministry of New and Renewable Energy, India, specifically to finance renewable energy and energy efficiency projects.
Where is the headquarters of IREDA?
The headquarters of the Indian Renewable Energy Development Agency (IREDA) is located in New Delhi, India. As a government-owned agency, IREDA promotes, develops, and extends financial assistance for renewable energy and energy efficiency projects throughout the country.