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  • Writer's pictureJatin Agarwal

IREDA IPO

Updated: Nov 17, 2023


IREDA Logo

Introduction

The Indian Renewable Energy Development Agency (IREDA), a government-owned NBFC dedicated to promoting renewable energy in India, is set to enter the public domain through an initial public offering (IPO). The company aims to raise ₹5,300 crore through this IPO, which is expected to be one of the largest IPOs in the renewable energy sector in India. This article provides a comprehensive overview of the IREDA IPO, including its objectives, financials, and potential risks and rewards for investors.


Company Overview

IREDA, established in 1987, has played a pivotal role in the development of India's renewable energy sector, providing financial and technical support to renewable energy projects across the country. The company has a strong track record of growth, with its disbursements reaching ₹30,000 crore in the fiscal year 2023.


Financial Performance

IREDA has exhibited a consistent track record of profitability. In the fiscal year 2023, the company recorded a net profit of ₹620 crore. Its total income stood at ₹11,500 crore in the same fiscal year.


IPO Overview

The proposed IPO comprises a fresh issue of up to ₹2,150 crore and an offer for sale (OFS) of up to ₹2,687 crore by the Government of India.


IPO Details

  • IPO Opening Date: November 21, 2023

  • IPO Closing Date: November 23, 2023

  • Listing Date: December 4, 2023

  • Promoter holding (pre and post IPO): 100% [pre-IPO holding]% 89.23% [post-IPO holding]%

  • Lot Size: 460 shares

  • IPO Price Band: ₹30 to ₹32 per share


Objectives of the Issue

IREDA intends to utilize the proceeds from the IPO to:

  • Augment its capital base to meet its future capital requirements

  • Fund ongoing and future renewable energy projects

  • Expand its geographical reach and strengthen its market presence

  • Diversify its product portfolio and develop new business opportunities


Grey Market Premium (GMP)

The IPO grey market premium (GMP) for IREDA is currently around ₹4 per share. This indicates that investors in the grey market are willing to pay ₹34 to ₹36 per share for the company's shares.


Potential Risks and Rewards

Risks:

  • Regulatory changes in the renewable energy sector

  • Competition from other NBFCs and banks

  • Economic downturn affecting the demand for renewable energy projects

Rewards:

  • Strong growth prospects of the Indian renewable energy sector

  • IREDA's strong track record and market position

  • Government support for renewable energy development


Conclusion

IREDA's IPO presents an attractive opportunity for investors to gain exposure to a leading NBFC in the Indian renewable energy sector with a proven track record of growth and profitability. The company's focus on supporting renewable energy projects aligns with India's ambitious renewable energy goals and positions it well to capitalize on the growing demand for renewable energy solutions. However, investors should carefully consider their risk tolerance and conduct thorough due diligence before investing in any IPO.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.

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