IREDA IPO Day 1: The Initial Public Offering of Indian Renewable Energy Development Agency (IREDA) opens for subscription today (November 21). The issue will close on Thursday, November 23.Indian Renewable Energy Development Agency (IREDA) is India’s first PSU IPO to hit the market in 2023 and the first after LIC’s stock market debut in May 2022. LIC currently is India’s largest IPO.
IREDA IPO Lot Size
Investors can bid for a minimum of 460 equity shares and in multiples of 460 equity shares thereafter. Hence, the minimum investment by retail investors would be Rs 13,800 at a lower price band of Rs 30. At the upper end, the bidding amount will increase to Rs 14,720.
IREDA IPO Offer Details
IREDA aims to raise Rs 2,150.21 crore via the IPO. The price band for the public offer, which will close on November 23, has been fixed at Rs 30-32 per share. The company will use the net proceeds to augment the capital base to meet future capital requirements and onward lending. IREDA expects to receive the benefits of listing the equity shares on the stock exchanges.
IREDA IPO: Financials
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. Total revenue rose 21.7 percent to Rs 3,481.9 crore in FY23 from Rs 2,859.9 crore in FY22. Profit after tax grew 36.4 percent to Rs 864.62 crore from Rs 633.52 crore in the same period. Profit came in at Rs 294.6 crore in Q1FY24.
The company is into promoting, developing and extending financial assistance for new and renewable energy projects, and energy efficiency and conservation projects, offering a comprehensive range of financial products and related services, from project conceptualisation to post-commissioning, for renewable energy projects and other value chain activities, such as equipment manufacturing and transmission.
It is also India’s largest pure-play green financing NBFC in India. The company has a geographically diversified portfolio, with term loans outstanding across 23 states and five Union Territories as of September 30, and has four strategically located branches in Mumbai, Hyderabad, Chennai, and Bhubaneshwar to maximize geographical range in terms of territory.
IREDA IPO GMP Today
According to market observers, unlisted shares of IREDA were trading Rs 7 higher in the grey market as compared with its issue price. The Rs 7 grey market premium or GMP means the grey market is expecting a 21.88 per cent listing gain from the public issue. The GMP is based on market sentiments and keeps changing.
‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
IREDA IPO: Should You Subscribe?
As a Mini Ratna enterprise, IREDA holds a pivotal position in the government’s renewable energy initiatives by financing such projects. The company’s stable operations are supported by its access to long-term financing sources. Also, the company has demonstrated consistent financial growth, said Shivani Nyati, Head of Wealth at Swastika Investmart.
However, Nyati noted that IREDA’s business remains susceptible to interest rate fluctuations. Additionally, its reliance on the renewable energy sector introduces a degree of industry-specific risk, the analyst said.
“The IPO is priced at a P/BV (price-book value) of 1.23 times, based on a NAV of 25.98, indicating a fair valuation. Thus, considering all these factors, we will assign Subscribe rating to this IPO,” the brokerage said.
According to Nirmal Bang, IREDA’s positioning as the largest pure-play green financing NBFC in India places it among the very few players who are well placed to capitalise on the rapid growth in the Renewable Energy sector
“On the back of a low base, demonstrated track record of high growth, improvement in asset quality and cheap valuations at 1.1 times trailing P/B (post issue), we rate the issue as ‘Subscribe’,” the brokerage said.