Indian Renewable Energy Development Agency Limited
Minimum investment
Bidding date
21 Nov - 23 Nov 2023
Price range
—
Minimum quantity
460
Minimum investment
₹13,800
Issue size
—
IPO doc (link)
RHP docs
Listing exchange
NSE/BSE
IREDA is a financial institution with over 36 years of experience in the business of promoting, developing and extending financial assistance for new and renewable energy (RE) projects, and energy efficiency and conservation (EEC) projects.
They are a wholly owned Government of India enterprise under the administrative control of the Ministry of New and Renewable Energy.
IREDA has financed projects across multiple RE sectors such as solar power, wind power, hydro power, transmission, biomass including bagasse and industrial co-generation, waste-to-energy, ethanol, compressed biogas, hybrid RE, EEC and green-mobility. They also offer financial products and schemes for new and emerging RE technologies, such as, biofuel, green hydrogen, battery energy storage systems, fuel cells, and hybrid RE projects.
ABOUT THE INDUSTRY
India is the world's third-largest producer and second-largest user of energy. Power demand in the country has been on the rise in the past decade. The total installed power generation capacity stood at 425 GW with renewable sources accounting for 42 % of the installed capacity.
RE demand is also driven by government’s thrust on the sector to achieve India’s climate targets – 500 GW of non-fossil fuel energy capacity by 2030, 50% of energy requirement to be met through renewable energy by 2030.
Track Record of Growth: IREDA has an established track record of consistent growth in loan book and stable profitability in the RE financing space in India. The Term Loans Outstanding grew at CAGR of 30% between FY 2021 and 2013.
Mini Ratna Status: They were conferred with the Mini Ratna (Category I) status in June 2015 and have been recommended by the MNRE for Navratna status.
Diversified and Secured Asset Base: The loan base is well diversified across states in India and across different sectors. Over 90% of asset base is secured, which provides substantial hedge in the event of default.
Strategic Role in Govt RE Initiatives: IREDA is a wholly owned GoI enterprise under the MNRE. Since inception, they have been closely involved in the development and implementation of policies and schemes for structural reform in the RE sector.
Cost Effective Borrowing, Control over NPAs: Being a public finance institution, IREDA has access to diversified and cost effective source of borrowings from within and outside India. With comprehensive credit appraisal policies, there is declining trend in NPAs in three preceding fiscals.
Interest Rate Risk: The business depends on interest income from the loans disbursed and the interest rates at which they borrow from financial institutions. Interest rate fluctuations due to macroeconomic factors can impact profitability.
Negative Cash Flows : They have had negative cash flows from operations in the past. Negative cash flows over extended periods, or significant negative cash flow in the short term, can impact business and growth plans.
Segment Concentration Risk: IREDA’s business is entirely concentrated in the Indian RE sector, which in general has many challenges. Even within the Indian RE sector, over 80% of Term Loans Outstanding are concentrated within four sectors.
Power Pricing Risk: Certain states that purchase electricity from IREDA borrowers have sought revision in the terms of their existing Pricing. A downward revision in the tariffs could negatively affect the cash flows of borrowers.
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