Navratna Stock Soars on QIP Announcement
A Navratna company, focused on financing renewable energy projects and energy efficiency in India, has seen its stock price increase by 5.52 percent. This surge follows the management’s announcement of a plan to raise Rs. 4500 crore through a Qualified Institutional Placement (QIP) in Q4 FY25.
Stock Price Movement
During Monday’s trading, the shares of Indian Renewable Energy Development Agency Limited climbed to an intraday high of 5.52 percent from its previous close of Rs. 201.20. The stock opened at Rs. 199.60 and is currently trading at Rs. 200.30, after reaching a high of Rs. 212.30 and a low of Rs. 196.40. The company's market capitalization is now approximately Rs. 53,782.17 crore.
What Happened
Indian Renewable Energy Development Agency (IREDA) intends to raise Rs 4,500 crore through a Qualified Institutional Placement (QIP) between January and March 2025.
The government is expected to dilute up to 7% of its 75% ownership in the company. The capital raised will be used to strengthen IREDA’s financial position, allowing it to fund more renewable energy initiatives and contribute to India’s shift towards cleaner energy.
Lending Portfolio
As of December 31, 2024, the company has reported strong growth in both loan approvals and disbursements, with Rs. 13,227 crore in approvals and Rs. 7,449 crore disbursed. This reflects an increase from the preceding quarter.
The total outstanding loans have reached Rs. 68,960 crores, with 76% allocated to the private sector and 24% to the public sector. The renewable energy sector, specifically solar and wind power, makes up a substantial part of the loan portfolio at Rs. 17,787 crores and Rs. 10,747 crores, respectively.
Recent Quarter Results and Ratios
Indian Renewable Energy Development Agency Limited’s revenue has increased from Rs. 1,253 crore in Q3 FY24 to Rs. 1,698 crore in Q3 FY25, a 35.51 percent increase. Net profits have also grown by 26.49 percent, from Rs. 336 crore in Q3 FY24 to Rs. 425 crore in Q3 FY25.
The company's revenue and net profits have grown at a Compound Annual Growth Rate of 19.71 percent and 38.02 percent respectively over the past five years.
The company's Return on Capital Employed (ROCE) and Return on Equity (ROE) are estimated to be 9.30 percent and 17.3 percent, respectively. The debt-to-equity ratio is expected to be 5.85x and the Earnings Per Share (EPS) is estimated at Rs. 5.71.
Shareholding Pattern
As of September 2024, the promoter group held a majority stake of 75% in Indian Renewable Energy Development Agency Limited. Foreign institutional investors held 2.02%, domestic institutional investors held 0.35%, and the public held 22.62% of the company's shares.
Company Overview
Indian Renewable Energy Development Agency Limited (IREDA), a public sector enterprise established in 1987, focuses on financing renewable energy projects and energy efficiency. Operating under the Ministry of New and Renewable Energy, IREDA holds Navratna status. This gives it greater operational autonomy.
IREDA offers various financial instruments, including project loans and refinancing, to support renewable energy projects throughout India. The company became public in November 2023 via an IPO, increasing its footprint in the renewable energy market.
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