IREDA IPO entails to raise ₹2,150.21 Cr and is a combination of fresh issue of 40.32 crore shares aggregating to Rs 1,290.13 crores and offer for sale of 26.88 crore shares aggregating to Rs 860.08 crores. IREDA which stands for Indian Renewable Energy Development Agency Limited, is a Mini Ratna Government of India Enterprise under the Ministry of New and Renewable Energy.
| IPO opens | November 21, 2023 |
| IPO Closes | Nov 23, 2023 |
| IPO Size (Rs.) | ₹2,150.21 Cr |
| IPO Size (shares) | 671,941,177 shares |
| Breakup | Fresh issue ₹1,290.13 Cr + OFS ₹860.08 Cr |
| Face Value: | ₹ 10/- |
| IPO Price in Rs : | ₹ 30 – 32 |
| Minimum Lot | 460 shares |
| Listing At | NSE , BSE |
| Anchor & QIB Quota | 50% |
| NII Quota | 15% |
| Retail Quota | 35% |
| Lead Manager | JM Financial, Citigroup Global Markets, BofA Securities |
| Registrar | Link Intime |
About IREDA:
- IREDA is a wholly owned Government of India (“GoI”) enterprise under the administrative control of the Ministry of New and Renewable Energy (the “MNRE”).
- Company was notified as a “Public Financial Institution” (“PFI”) under Section 4A of the Companies Act, 1956 by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Government of India on October 17, 1995.
- It is registered with the Reserve Bank of India (the “RBI”) as a Systemically Important Non-Deposit-taking Non-Banking Finance Company (a “NBFC- ND-SI”), with Infrastructure Finance Company (“IFC”) status.
- In September 2023, IREDA was upgraded from Schedule B to Schedule A in the list of CPSEs by the Department of Public Enterprises
- IREDA was conferred with the Mini Ratna (Category I) status in June 2015.
- IREDA is wholly owned Government of Indiaenterprise under the administrative control of the Ministry of New and Renewable Energy (.
- The Company was notified as a “Public Financial Institution” (“PFI”) under Section 4A of the Companies Act, 1956 by the Department of Company Affairs, Ministry of Law, Justice and Company Affairs, Government of India on October 17, 1995.
- It is registered with RBI as a Systemically Important Non-Deposit-taking Non-Banking Finance Company ( “NBFC- ND-SI”), with Infrastructure Finance Company (“IFC”) status.
- In September 2023, IREDA was upgraded from Schedule B to Schedule A in the list of CPSEs by the Department of Public Enterprises.
- It was also conferred with the Mini Ratna (Category I) status in June 2015 by the DPE.
- Since Fiscal 2021, it has been consistently been rated ‘Excellent’ by the MNRE in course of evaluation of its performance in achieving key targets.
- 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.
- It provides a comprehensive range of financial products and related services, from project conceptualisation to post-commissioning, for RE projects and other value chain activities, such as equipment manufacturing and transmission.
- As of September 30, 2023, it had a diversified portfolio of Term Loans Outstanding, amounting to ₹ 475,144.83 million.
- As of September 30, 2023, IREDA had 174 full-time employees.
Financials: IREDA
| Particulars / Rs. In crore | 2023(06) | 2022(06) | 2023(12) | 2022(12) | 2021(12) |
| Total Income | 2,320 | 1,578 | 3,483 | 2,874 | 2,658 |
| Profit after tax | 579 | 410 | 865 | 634 | 346 |
| Net interest income | 785 | 624 | 1,324 | 1,128 | 992 |
| Net worth | 6,581 | 5,638 | 5,935 | 5,268 | 2,996 |
| Term Loans Outstanding | 47,514 | 33,783 | 47,076 | 33,931 | 27,854 |
| Total borrowings | 39,850 | 30,230 | 40,165 | 27,613 | 24,000 |
| Net interest margin (%) | 1.68% | 1.79% | 3.32% | 3.75% | 3.93% |
| Total Debt to net worth | 6.06 | 5.36 | 6.77 | 5.24 | 8.01 |
| Cost to income ratio (%) | 64.69% | 60.95% | 67.29% | 70.99% | 78.57% |
| ROA (%) | 1.14% | 1.06% | 1.98% | 1.89% | 1.20% |
| CRAR (%) | 20.92% | 23.55% | 18.82% | 21.22% | 17.12% |
| Gross NPAs (%) | 3.13% | 5.06% | 3.21% | 5.21% | 8.77% |
| Net NPAs (%) | 1.65% | 2.72% | 1.66% | 3.12% | 5.61% |
| EPS – Basic & Diluted (₹) | 2.54 | 1.8 | 3.78 | 8.03 | 4.41 |
| RONW (%) | 9.26% | 7.52% | 15.43% | 15.33% | 12.56% |
| Net Asset Value (₹) | 28.80 | 24.68 | 25.98 | 23.06 | 38.18 |
| Post issue Share Capital | 2687.76 | ||||
| FV | 10.0 | ||||
| IPO price | 32.0 | ||||
| EPS Fy23 | 3.2 | ||||
| PE Fy23 | 9.9 | ||||
| EPS Fy24 (annualized) | 4.3 | ||||
| PE Fy24 (annualized) | 7.4 | ||||
| Market cap in Lacs | 8,600.8 | ||||
| Market cap / Sales | 2.47 |
Anchor: IREDA IPO
IREDA raised Rs 643.26 crore from 58 anchor investors indicating a strong response. Investors such as Goldman Sachs, Societe Generale, Integrated Core Strategies (Asia). Moon Capital Trading, Copthall Mauritius, SBI Mutual Fund, HDFC Mutual Fund, Bandhan MF, Kotak MF, BNP LIC MF, participated in the anchor book.
IREDA IPO: Salient Points
- India has set one of the most accelerated energy transition trajectories in the world, with the announcement of 500 GW non-fossil fuel-based capacity installation by 2030.
- As of September 30, 2023, IREDA had a diversified portfolio of term loan outstanding amounting to ₹47,514.48 crore.
- 75% of the term loans go to private entrepreneurs.
- In the past, IREDA gross and net NPAs have been as follows:
| Particulars | As of March 31, | As of September 30, | |||
| 2021 | 2022 | 2023 | 2022 | 2023 | |
| Gross NPA(₹ million) | 24,415.53 | 17,682.54 | 15,133.54 | 17,087.67 | 14,860.81 |
| Gross NPA (%) | 8.77% | 5.21% | 3.21% | 5.06% | 3.13% |
| Net NPA (₹ million) | 15,102.24 | 10,353.90 | 7,680.24 | 8,957.41 | 7,710.76 |
| Net NPA (%) | 5.61% | 3.12% | 1.66% | 2.72% | 1.65% |
- The Non Performing assets were more in two area of biomass and from hydro energy. % of loans to these areas has declined and NPAs have come down considerably.. The company’s Net NPA’s have improved from 5.61% in FY21 to 1.66% as of FY 23.
- The Company’s Term Loans Outstanding grew to ₹ 33,783 Cr in FY23 from ₹ 27,854 Cr in FY21, at CAGR of 30%, while Profit After Tax grew to ₹ 410.26 Cr from ₹ 346 Cr, at CAGR of 57.99% during the FY21 to FY23.
- Track record of growth, geared towards high quality assets, diversified asset book and stable profitability.
- Strategic role in Government of India initiatives in the Renewable Energy sector.
- Established and trusted brand name operating in a rapidly expanding sector.
- Digitized process for borrower centricity and operational scalability, with presence across India.
- Comprehensive data-based credit appraisal process and risk-based pricing, with efficient post-disbursement project monitoring and recovery processes.
- Access to diversified and cost-effective long-term sources of borrowing with a judicious approach towards asset-liability management.
- As of September 30, 2023, it had a diversified portfolio of term loan outstanding amounting to ₹47,514.48 crore.
- IREDA also extends lines of credit to other non-banking financial companies (NBFCs) for lending to RE and EEC projects.
- It also offers loans to government entities and financing schemes for RE suppliers, manufacturers, and contractors.
- IREDA is already funding compressed biogas and bioethanol production projects. It is now putting focus on new and emerging areas to include financing the entire value chain of green mobility, green hydrogen, energy storage, financial assistance to EV fleet owners and operators, charging infrastructure etc.
- IREDA is India’s largest pure-play green financing NBFC in India.
- Net Interest Margin (NIM) for last 3 years was 3.93%, 3.75%, and 3.32%, respectively. The NIM has decreased in this period. As indicated by management IREDA is expected to report better NIMs in forthcoming quarters.
- Peers: Listed peers shown in RHP are REC Ltd. and Power Finance Corp. They are trading at a P/E of 7.12x and 5.82x respectively.
- IREDA is demanding a TTM P/B multiple of 1.2x, REC and PFC are at P/B multiple of 1.44 and .68x respectively.
- IREDA IPO is coming at a PE ratio of 9.9 (FY23) and 7.4x (FY24 annualized on Q1FY24 results).
- IREDA has not paid dividend for last few years and took exemption from Govt. It has now adopted a dividend policy in August 2023 If it does dividend distribution it can be of the order of ~5% yield on IPO price.
- I intend to apply in IREDA IPO. IREDA looks well placed to capitalize the growth in the RE sector in the country. My opinion that investors should not go by bad experience of LIC IPO (Govt body IPO) in this case. However we can say this only on listing.
- GMP as reported on social media is around Rs. 8.
- Equity investments including IPOs carry good degree of risk.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.