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IREDA IPO: Check Issue Size, Date, and Price Band

20 Nov 2023

Introduction:

The penultimate week of November 2020 promises a lot of excitement for IPO investors. At least four mainboard companies have announced their Initial Public Offerings (IPOs) to hit the markets this week. One of them is the Indian Renewable Energy Development Agency (IREDA) Limited. It will be the first Public Sector Undertaking (PSU) to go public since the Life Insurance Corporation (LIC) in May 2022.

The company plans to augment its capital base to meet working capital requirements from the money raised. It also seeks the benefits of being listed on the stock exchanges. Continue reading to learn more about the IREDA IPO, including issue size, price band, listing date, etc. 

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About Indian Renewable Energy Development Agency Limited

Established in 1987, the Indian Renewable Energy Development Agency (IREDA) Ltd. operates as a public limited Mini Ratna (Category I) company under the administrative control of the Ministry of New and Renewable Energy (MRE) under the Government of India. The company’s primary objective is to promote, develop, and extend financial assistance for new and renewable energy (RE) projects and energy efficiency and conservation (EEC) across the country.

To date, the company has financed several projects belonging to RE sectors, such as solar power, wind power, biomass, hydropower, transmission, water-to-energy, and ethanol. It has also sanctioned loans to develop and implement new and emerging RE technologies.

Key Strengths of the Company

Below are the key strengths of IREDA Ltd. as highlighted in its Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI):

  • The company operates as a wholly-owned Government of India (GOI) enterprise
  • It has played a significant role in implementing key government policies in the RE sector
  • The largest pure-play green financing NBFC in India with an AUM of Rs. 470.7 billion (as of 31 March 2023)
  • A resilient IT framework featuring an ERP system customized to meet specific business needs
  • One of the most respected and trusted brands in a rapidly expanding industry
  • The availability of varied and economically efficient long-term financing options

Key Weaknesses or Risks Highlighted

Below are the key risks or weaknesses associated with IREDA Ltd:

  • 60% of the assets are concentrated in only five Indian states
  • Fluctuation in the interest rate can impact the profit margin and the net income
  • The company has to follow the NBFC rules and regulations of the Reserve Bank of India (RBI)
  • There is a substantial risk of borrowers turning into Non-Performing Assets (NPAs) due to project implementation failure
  • Potential downgrade in credit ratings can impact the company’s reputation and growth

Key Financials of the Company

Analysing the financials of the issuing company allows you to gauge its growth potential and accurate valuations. This, in turn, helps you make informed investment decisions. The table below depicts the key financials of IREDA Ltd. for the last three completed financial years:

Particulars Six-month Period Ended September 30, 2023 As of and for FY Ended March 31
2023 2022 2021
Net Worth 6,581 5,935 5,268 2,996
Gross Loan Portfolio 47,514 47,076 33,931 27,854
Revenue From Operations 2,320 3,482 2,860 2,655
Net Interest Income 785 1,324 1,128 992
Profit After Tax 579 865 634 346
Net Interest Margins 1.70% 3.30% 3.80% 3.90%
Net NPA 1.70% 1.70% 3.10% 5.60%
Earnings Per Share (Diluted) 2.5 3.8 8 4
Return on Equity (%) 9% 15% 15% 13%
Return on Average Assets 1% 2% 2% 1%

*Amount in Crores. Source – RHP Dated 11 November 2023 on SEBI website.

As visible, the financials of IREDA Ltd. are robust. The company’s net worth has improved from Rs. 2,996 crores in FY21 to Rs. 5,935 crores in FY23. The net interest income and profit after tax have also grown steadily. The return on equity (ROE) for the last financial year stood at an impressive 15%.

Details of IREDA IPO

IREDA IPO, comprising an offer for sale and a fresh issue worth Rs. 2150 crores, opens for public subscription on Tuesday, 21 November 2023, and closes on Thursday, 23 November 2023. As a retail investor, you can apply for a minimum of 460 shares (and in multiples thereof) within the price band of Rs. 30 to Rs. 32 per share.

Refer to the table below for more IPO details:

IPO Date 21 November to 23 November 2023
Basis of Allotment 29-Nov-23
Listing Date 04-Dec-23
Face Value Rs. 10 per share
Price Band Rs. 30 to Rs. 32
Lot Size 460 shares
Total Issue Size (OFS + Fresh Issue) Rs. 2150 crores
Listing At NSE, BSE

To conclude

Investing in the IREDA IPO provides an opportunity for investors to invest in a growing PSU company. But before investing, you must consider your risk appetite, investment goal, and horizon. With Motilal Oswal, you can open a free Demat account and invest in IPOs seamlessly.

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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