IREDA Shares Skyrocket Over 11% After Fundraise Plan; Is There More Upside Left?

Shares of Indian Renewable Energy Development Agency (IREDA) Ltd rose sharply in Thursday’s trade after the company said it would consider a fundraising proposal of up to Rs 4,500 crore. The stock surged 11.24 per cent to hit a day high of Rs 265.75. It was last seen trading 9.94 per cent higher at Rs 262.65.

This comes after the company’s board is expected to consider a proposal to raise Rs 4,500 crore in one or more tranches through a follow-on public offer (FPO) or other modes during its meeting on August 29.

In its filing to the exchanges post-market hours on Wednesday, IREDA informed about its fundraising plan via FPO or other routes — qualified institutional placement (QIP), rights issue, or preferential issue. It could also be a combination of these, the filing said.

IREDA reported a net profit of Rs 384 crore for the quarter ended June 30, 2024 — a 30 per cent uptick over Rs 295 crore reported in the year-ago period. The revenue from operations stood at Rs 1.502 crore in the quarter as against Rs 1,144 crore logged in the corresponding quarter of the previous financial year. It was a jump of over 32 per cent.

At this price, the multibagger counter has gained 150.98 per cent on a year-to-date (YTD) basis. Also, IREDA’s stock has seen a massive uptick from its initial public offering (IPO) price of Rs 32. It was listed on November 29 last year.

Despite the mentioned rise, the counter has slipped 15.27 per cent from its record high value of Rs 310, a level seen on July 15, 2024.

Analysts largely remained divided on the stock. “Given the government’s focus on the renewable sector, we remain positive on growth prospects which will aid long-term sustained growth in AUM,” said analysts at ICICIDirect. “Thus, we value the stock at 49 times FY26E EPS, assigning a target of Rs 330,” they added with a ‘Buy’ rating on the stock.

Phillip Capital analysts have maintained their ‘Sell’ rating with a revised target of Rs 130. “The recent rally in the stock is driven by passive flows rather than any major fundamental reason. We believe the best is already priced into the stock,” it said post Q1 results.

“IREDA has been in a consolidation phase over the last few weeks. Post-IPO, the stock is one of the strong performers. Due to the focus on renewable energy and lending towards renewable projects, the scrip has been gaining momentum. But, valuations are fully priced-in at this point in time. So, one should have a strict trailing stop loss. For a long-term perspective, investors with a high-risk appetite can add IREDA to their portfolio,” said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.

IREDA is a ‘Navratna’ PSU under the administrative controls of the Ministry of New and Renewable Energy. As of June 2024, the government held a 75 per cent stake in it.

The organisation offers financial products (fund- and non-fund-based) associated services, from project inception to post-completion, for renewable energy projects and related activities like equipment manufacturing and transmission.

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