NEW DELHI – The Indian Renewable Energy Development Agency (IREDA), led by Pradip Kumar Das, has announced its upcoming initial public offering (IPO), which is scheduled from November 21-23. The price range for the shares has been set between Rs 30 and Rs 32. This marks the second Central Government entity to go public following the Life Insurance Corporation of India’s (LIC) offering last year.
IREDA, recognized as a Mini-Ratna Category-I Public Sector Undertaking (PSU) and a Non-Banking Financial Company-Not Deposit Taking-Systemically Important (NBFCND-SI) that also doubles as an Infrastructure Finance Company (IFC), has been instrumental in financing renewable energy projects across India for nearly three decades. With a current market share of approximately one-third, IREDA has ambitious plans to expand India’s installed capacity from its current level of around two-fifths to half-a-terawatt by the end of this decade.
The broader renewable energy sector in India is looking to attract investments totaling three trillion INR, with NBFCs like IREDA expected to supply four-tenths of this amount. As of September this year, IREDA’s financial health appeared robust with term loans amassing nearly fifty thousand crores INR. The company’s financial growth is evident in its net interest income, which exceeded thirteen hundred crores INR, and net profits that topped eight hundred crores INR for the fiscal year 2023. Additionally, IREDA boasts a strong capital adequacy ratio standing over eighteen percent for FY23.
For the semester ending in September, IREDA reported net interest earnings close to eight hundred crores INR and post-tax profits nearing six hundred crores INR. During this period, it also approved loans amounting to nearly five thousand crores INR. The company’s financial position was further bolstered by a significant capital injection of fifteen hundred crores INR from the government in March and benefits from dividend exemptions, all while complying with the Reserve Bank of India’s regulatory framework.
IREDA’s IPO comes at a time when India is undergoing a transformative shift in its energy sector, moving traditional renewable sources into mainstream ones and playing a significant role in supporting other developing countries through initiatives like the International Solar Alliance. The agency’s efforts are pivotal in achieving India’s ambitious renewable energy targets and contributing to global sustainable development goals.
InvestingPro Insights
In the light of the forthcoming initial public offering (IPO) of the Indian Renewable Energy Development Agency (IREDA), InvestingPro provides some key insights that potential investors may find valuable.
According to InvestingPro data, companies like IREDA that have a high return on invested capital and operate with a high return on assets often yield significant returns for their investors. This aligns with IREDA’s robust financial health, as evidenced by its strong capital adequacy ratio and net profits for the fiscal year 2023.
InvestingPro Tips also suggests that companies that have raised their dividends for consecutive years are often reliable investments. IREDA’s financial growth, which is evident in its net interest income and the significant capital injection it received from the government, suggests a potential for consistent dividends in the future.
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