IREDA Hits 52-Week High, Stock Up 218% From Its IPO Price; Buy, Sell Or Hold?

IREDA Share Price NSE, BSE: Shares of the Indian Renewable Energy Development Agency (IREDA) hit a fresh 52-week high on Tuesday i.e. on December 12.

With Tuesday’s move, the stock has now tripled from its IPO price of Rs 32, after making an intraday high of Rs 102.02.

The stock has tripled from its IPO price within just ten days of listing. The stock had gone public on November 29, ending 87.5 per cent higher from its issue price.

IREDA’s IPO was the first PSU IPO after LIC in May last year. The issue was subscribed nearly 40 times, making it the seventh most subscribed PSU IPO of the decade.

In the ten trading days since listing, shares of IREDA have declined only twice. The stock ended 10 per cent higher on Friday, before Monday’s 20 per cent surge.

With Tuesday’s surge, IREDA’s market capitalisation also crossed the mark of Rs 25,000 crore.

23 crore shares of IREDA have already changed hands in Tuesday’s trading session, compared to 21 crore shares on Monday and 26 crore shares on Friday.

Shortly after opening, IREDA’s retail division quickly sanctioned its first loan amounting to Rs 58 crore under KUSUM-B scheme.

IREDA was the first public sector company to hit the capital market in over a year, after Life Insurance Corporation of India’s debut issue in May 2022. The power financier’s asset book is mainly dominated by solar energy (30 per cent), followed by wind power (20.9 per cent), state utilities (19.2 per cent), and hydropower (11.5 per cent).

Apart from subscribing to the IPO for listing gains, analysts had recommended investing long-term in the stock considering GOI initiatives to promote the renewable energy sector. While the stock has very little charting history, as it listed only on November 29, some investors are hopeful that it will continue hitting fresh new highs.

With the rally, the valuations have become expensive compared to peers like PFC and REC, but IREDA’s loan book growth prospects are stronger, believe analysts.

According to Nirmal Bang, diversification and expansion in emerging green technologies such as green hydrogen, pumped hydro storage power plants, battery storage value chain, and green energy corridor provide scope for longer-term sustainability of high growth of its loan book.

IREDA recorded a 58 per cent CAGR growth in net profit during FY21-FY23. The capital-to-risk weighted asset ratio (CRAR) was 21.22 per cent as of March 31, 2022, 18.82 per cent as of March 31, 2023, and 20.92 per cent as of September 30, 2023.