Indian Renewable Energy Development Authority (IREDA) Limited is gearing up for an IPO scheduled to open on November 21, 2023 and close on November 23, 2023. As a Mini Ratna Category I government company, IREDA has demonstrated strong revenue and profit growth in India. recent years. This article provides details about IREDA IPO and explores positive risk factors and a complete review.
IREDA IPO – Date and Issuance Details
| IPO start date | November 21, 2023 |
| IPO deadline | November 23, 2023 |
| IPO listing date | December 4, 2023 |
| Type of problem | Book Built Issue IPO |
| face value | 10 rupees per share |
| IPO price range | 30 to 32 rupees per share |
| lot size | 460 shares |
| Exhibition location | BSE and NSE |
| Total issue size | Rs. 215.021 billion |
| Latest issue | Rs. 129.013 billion |
| OFS | Rs. 860.08 billion |
About IREDA Co., Ltd.:
Ireda Co., Ltd. is a wholly owned company of the Government of India under the Ministry of New and Renewable Energy.
It is a systemically important non-deposit-taking NBFC company that is registered as a public financial institution and has the status of an infrastructure finance company.
The company is a financial institution with more than 36 years of experience in promoting, developing, and financing new and renewable energy projects, energy efficiency and conservation projects.
The company was also awarded Mini Ratna (Category I) status in 2015.
The company has consistently received “Excellent” ratings from MNRE for its performance against key objectives.
IREDA Limited – Finance
| Fiscal year end/period end (amount in billions) | ||||
| Period ends | March 31, 2021 | March 31, 22 | March 31, 23 | September 30, 23 |
|---|---|---|---|---|
| assets | 30,293.39 | 36,708.41 | 50,446.98 | 51,208.36 |
| revenue | 2,657.74 | 2,874.16 | 3,483.04 | 2,320.46 |
| Profit after tax | 346.38 | 633.53 | 864.63 | 579.32 |
| net worth | 2,995.60 | 5,268.11 | 5,935.17 | 6,580.61 |
| reserves and surplus | 1,386.12 | 1,776.05 | 2,310.96 | 2,550.36 |
| Total loan amount | 24,000.00 | 27,613.07 | 40,165.23 | 39,850.19 |
IREDA IPO – Valuation
- The IPO price range is between Rs 30 and Rs 32 per share.
- Considering last year’s FY23 EPS was Rs 3.78, the P/E ratio is 8x.
- Considering the last three years’ weighted EPS of Rs 5.3, the P/E ratio is 6x.
- Listed peers like REC Limited have a P/E ratio of 7.7x (highest), Power Finance Corporation has a P/E ratio of 4.8x (lowest), and the industry average P/E ratio is 6.2x. Therefore, an IPO price range of 6x to 8x P/E is considered to be perfectly priced.
IREDA IPO – Positive factors
- The company has high-quality assets, a diversified asset book and a strong growth track record with stable profitability.
- The company’s comprehensive database credit evaluation process and risk-based pricing, as well as efficient post-execution project monitoring and recovery processes, support the company’s growth.
- Due to various initiatives of the Indian government, the renewable energy sector will grow significantly. This helps companies grow at a faster pace.
- Strong revenue and margin growth in the past.
IREDA IPO – Negative or risk factors
- IPO proceeds include both new issues and OFS. In an offer for sale (OFS), the proceeds go to the selling shareholder (in this case, the Government of India) and the company receives no benefit.
- If we are unable to effectively manage the quality and NPA levels of our growing asset portfolio, our business and financial performance may be adversely affected.
- Changes in interest rates can have a negative impact on your business.
- We may be unable to secure borrowings on commercially acceptable terms and competitive interest rates, which could adversely affect our business.
- Projects and plans to generate electricity and energy through renewable sources such as solar, wind, hydropower, biomass, waste-to-energy, and new technologies have inherent risks that, if realized, could adversely affect a company’s business. may give.
- Corporate credit ratings have been downgraded in the past (India Ratings downgraded its own bonds from AAA/Negative to AA+/Stable in 2020.). If the company’s credit rating is downgraded in the future, it could have an adverse impact on the company’s business.
- The company has had negative operating cash flow in the past. There is no guarantee that such negative operating cash flows will not occur again in the future.
- Investors should consider all internal and external risk factors. IREDA IPO RHP.
IREDA IPO – Should you invest or avoid?
IRDEA, a Miniratna (Category I) government agency, is a financial institution with 36 years of experience that actively promotes, develops and extends financial support for new and renewable energy projects, as well as energy efficiency and conservation projects. Masu. The company has a strong growth track record with high-quality assets, a diversified asset book and stable profitability. The Indian government’s commitment to renewable energy projects is expected to boost corporate growth.
On the other hand, the company may suffer if it is unable to maintain the quality and effectively manage its growing asset portfolio and NPAs. Changes in interest rates can affect your business. The company’s credit rating for corporate bonds has been downgraded in the past. The OFS portion of the IPO will go to the Indian government, but the company will not get anything from it. The IPO price is also full price.
Investors must remember that IRFC will be listed below the IPO price on the day of listing. Therefore, please do not invest with the expectation of listing profits.
Investors should consider all the positive aspects and risk factors (both internal and external due to RHP) before investing in such IPOs in the medium to long term.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
