On January 17, shares of the Indian Renewable Energy Development Agency (IREDA) shot up more than 5% to an all-time high of Rs 125.60 on the NSE, defying the general trend in the market. The increase occurs one day after the business declared that it will co-finance renewable energy projects in India with Indian Overseas Bank (IOB).
The deal, which was signed by IOB Managing Director and Chief Executive Officer Ajay Kumar Srivastava and IREDA Chairman and Managing Director Pradip Kumar Das, paves the way for loan syndication and co-lending for a wide range of renewable energy projects throughout the nation, according to IREDA.
“The partnership aims to streamline loan syndication and underwriting processes, management of Trust and Retention Account (TRA) for IREDA borrowers, and work towards fixed interest rates over a 3-4-year period for IREDA borrowings,” Das stated.
He also mentioned that IREDA’s relationships with Bank of Baroda, Bank of India, Union Bank of India, India Infrastructure Finance Company Limited, and Bank of Maharashtra are strengthened by this collaboration.
Under the Ministry of New and Renewable Energy, IREDA is a non-banking financial organization that promotes, develops, and provides funding for the establishment of initiatives pertaining to energy efficiency and conservation as well as new and renewable energy sources.
The National Stock Exchange (NSE) saw 4.8 percent higher trade for the IREDA shares at Rs 125.25 at 10:21 a.m. The stock, which was priced 56.25 percent more than the IPO price of Rs 32, debuted on the NSE on November 29 at Rs 50. At that point, the stock was trading 31% above its issuance price and 150% above its listing price.
According to Phillip Capital analysts, the country’s growing need for renewable energy will cause IREDA to see significant loan growth throughout FY23–26. However, because of pressure on margins and the normalization of credit costs (which was negative in H1 FY24), they noted, the predicted growth in earnings is not expected to keep pace with the expansion in loans.
The firm pointed out that although loan growth is strong, return ratios are poor and there is more exposure to the private sector, undermining confidence. With a target price of Rs 80 and a “sell” rating, it began coverage of the stock and stated, “We believe the best is already priced in.”
Nuvama Alternative & Quantitative Research lists IREDA as one of the leading candidates most likely to be included in the MSCI Smallcap index. With changes scheduled for February 29, MSCI will make the official announcement on February 13.
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