IREDA hits 20% upper limit; stock up 166% against issue price in 11 days

Shares of Indian Renewable Energy Development Agency (IREDA) were locked at the 20 per cent upper circuit at Rs 85.02 on the BSE on Monday at 11:21 AM, on the back of heavy volumes with only buyers seen on the counter. In past two trading days, the stock of state-owned financial institution company has rallied 32 per cent.

The counter has seen huge trading volumes today with a combined 210.51 million equity shares changing hands. There are pending buy orders for a combined 18.31 million equity shares on the NSE and BSE. Currently, the stock price of IREDA has zoomed 166 per cent against its issue price of Rs 32 per share. The company made its stock market debut on November 29.

IREDA is India's only renewable energy (RE)-focused state-owned non-banking financial company (NBFC). IREDA's positioning as the largest pure-play green financing NBFC in India places it among the very few players who are well placed to capitalise on the rapid growth in the RE sector. There has been a fair amount of thrust on RE after 2014 by the new government at the Centre. In an exchange filing on Friday after market hours, IREDA said the company has launched retail division. This strategic initiative is geared towards enhancing emphasis on providing loans to borrowers in the PM-KUSUM scheme, Rooftop Solar, and other Business-to-Consumer (B2C) sectors.

Shortly after opening, IREDA’s Retail division quickly sanctioned its first loan amounting to Rs 58 crore under KUSUM-B, underscoring IREDA's dedication to emerging as the preferred lender in new segments, mirroring its success in other renewable energy sectors, the company said. As a Systemically Important NBFC, IREDA offers a range of financial products and services, spanning project conception to post-commissioning, covering various value chain activities including equipment manufacturing and transmission. IREDA has a diverse term loan portfolio, financing projects in various RE sectors like solar, wind, hydro, transmission, biomass, waste-to-energy, ethanol, compressed biogas, hybrid RE, EEC, and green mobility. Meanwhile, India has steadily improved its renewable capacity to 179 GW as of October 2023 (including 47 GW of large hydro capacities), although the pace of addition has been slow in recent years.

The government is targeting 500 GW of renewable capacity by FY2030E - while the key players have lined up impressive plans to set up renewable capacities, execution has been patchy so far. The government has improved renewable auctioning from ~15 GW annual run-rate to 20GW for YTD FY2024, with plans to achieve 50 GW of annual auctions for FY2024. According to analysts at Kotak Securities, renewable capacity addition in India has been slow in recent years (~15 GW annually), which needs to pick up to 40-50GW annual run-rate. This, along with storage and cell/module facilities, would entail large investments to spur growth in the sector. While key players have large plans to set up new capacities, the implementation would be key given the slow track-record in the past. The upcoming investment cycle keeps us positive on the sector, the brokerage firm said in its sector report.