Home/IPOs/IREDA
Start Date21-11-2023
Application Timing10am-5pm
Price Range₹30 - ₹32
Min Qty460
Min. Investment₹13800
Listing DateNA
Close Date23-11-2023
About Indian Renewable Energy Development Agency Limited
Why To Invest in Indian Renewable Energy Development Agency Limited
India’s largest pure play green financing NBFC, government owned enterprise with Mini Ratna status. The IPO proceeds will be used to augment capital base for future capital requirement and lending. The company also intends to benefit from listing and enhance brand image.
Strengths And Risks
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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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