IREDA’s IPO Receives Strong Response on Day 1
The Government of India-owned Indian Renewable Energy Development Agency (IREDA) saw a strong response to its initial public offer (IPO) as it was subscribed 1.96 times the shares on offer on the first day of the issue.
The ₹2,150 crore issue, which closes on November 23, has a fixed price band of ₹30-32 per share. This public financial institution (PFI) plans to use the net proceeds from the offering to augment its capital base to meet future capital requirements and for onward lending.
The IPO received good response from qualified institutional buyers (QIBs), non-institutional investors, and retail investors on the first day. The non-institutional investor portion was subscribed 2.7 times, while the QIB portion was subscribed 1.3 times.
IREDA raised ₹643 crore from anchor investors like SBI Banking & Financial Services Fund, HDFC Mutual Fund, ICICI Prudential PSU Equity Fund, and more ahead of the IPO.
The company, which has over 36 years of experience in promoting, developing, and extending financial assistance for new and renewable energy projects, also serves energy efficiency and conservation projects.
Its revenue from operations grew 24% in FY23, and its net profit grew 36% during the same period. Its capital to risk-weighted asset ratio (CRAR) stood at 18.8% for FY23, while its gross non-performing assets (NPA) stood at 3.21% by the end of FY23.
However, its finances are indirectly linked to state electricity distribution companies or discoms, and the poor health of these discoms may lead to delays in payments to renewable energy projects they finance. Certain discoms that purchase electricity from IREDA’s borrowers have sought revision in the terms of their existing power purchase agreements (PPAs), which could negatively affect its borrowers’ repayment capabilities.
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