IREDA IPO to open on November 21, price band fixed at ₹30-32/share
- IREDA intends to raise ₹2,150 crore via the initial public offer.
- It intends to use net proceeds to augment its capital base and onward lending.
- Investors can bid for a minimum of 460 shares and in multiples of 460 thereafter.
AdvertisementThe initial public offer (IPO) of Indian Renewable Energy Development Agency (IREDA) will open for subscription on November 21 and close on November 23. It has fixed a price band of ₹30-32 per share. Investors can bid for a minimum of 460 shares and in multiples of 460 thereafter.
The government of India promoted company intends to raise as much as ₹2,150 crore via the issue. The issue is a combination of offer for sale and fresh issue. The company intends to use the net proceeds from the fresh issue towards augmenting its capital base to meet future capital requirements and onward lending.
IREDA is a public financial institution (PFI) registered as a Systemically Important Non-Deposit-taking Non-Banking Finance Company (NBFCND-SI). It also has an Infrastructure Finance Company (IFC) status.
The financial institution with over 36 years of experience in promoting, developing and extending financial assistance for new and renewable energy projects. It also serves energy efficiency and conservation projects.
It provides financial products and related services, from project conceptualisation to post-commissioning, for and other value chain activities like equipment manufacturing and transmission. As of September 30, 2023, it had a diversified portfolio of term loan outstanding amounting to ₹47,514 crore.
IDBI Capital Markets & Securities Limited, BOB Capital Markets Limited, and SBI Capital Markets Limited are the book-running lead managers.
Financial & risk factors
IREDA’s revenue from operations grew 24% in FY23, as compared to the year before. Its net profit grew 36% during the same period. Its capital to risk-weighted asset ratio (CRAR) stood at 18.8% for FY23. Its gross non-performing assets (NPA) stood at 3.21% by the end of FY23.
Its listed peers in the market are REC and Power Finance Corporation.
|Revenue from operations||₹3,373 crore||₹2,713 crore||₹2,564 crore|
|Net Profit||₹1,139 crore||₹833 crore||₹569 crore|
IREDA’s finances are indirectly linked to that of state electricity distribution companies or discoms. The poor health of state discoms may lead to delays in payments to renewable energy projects that they finance.
Certain discoms that purchase electricity from its borrowers sought revision in the terms of their existing power purchase agreements (PPAs). A downward revision in the tariffs could negatively affect its borrowers, impacting their repayment capabilities.
Its NPAs may increase due to force majeure events, delay in project implementation and more, it said in its risk factors. A lot of its NPAs are concentrated around biomass power and cogeneration, hydro power and wind power projects.
Apart from that, interest rate volatility, inherent risks in renewable projects, vagaries of nature, and highly competitive environment are listed as risk factors in its DRHP.
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