Indian Renewable Energy Development Agency (IREDA) Limited filed its DRHP with SEBI at the start of September 2023. This is the second public enterprise IPO after Life Insurance Corporation to go public. IREDA mainly provides funding to green energy projects. The PSU has an outstanding loan term loan worth Rs. 47,206.55 crore spread across 23 states.
Learn more about the company’s business model, financials, strengths, and risks in the following sections.
Also Read: How does an IPO work?
Table of Content
About the Company
Indian Renewable Energy Development Agency Private Limited started by financing wind and solar energy projects under the governance of the Ministry of New and Renewable Energy. It has now spread across other green energy sectors too.
It is a Mini Ratna (Category – I) Public Sector Utility enterprise established in 1987 that promotes, develops, and provides financial aid to Renewable Energy and Energy Efficiency/Conservation Projects. The public institution has more than 36 years of experience in developing green energy projects. Its roles include providing financial services, equipment manufacturing, project design and more.
IREDA is India’s largest financing NBFC and holds a highly diversified portfolio worth Rs. 47,206.66 crore spread across 23 states and 5 union territories. The company is registered as a public financial institution and a systemically important NBFC in India.
IPO Details
The IPO will comprise both a fresh issue and an OFS (Offer for Sale). There will be fresh issues of 40.31 crore shares and an OFS of 26.88 crore equity shares by the government aggregating up to 67.19 crore shares. The promoter participating in the OFS is the office of the President of India acting through the Ministry of New and Renewable Energy.
IREDA Limited will use the proceeds from its IPO to enhance its capital base and onward lending for the future. The shares will be listed on both BSE and NSE.
SBI Capital Markets, IDBI Capital Markets & Securities, and BOB Capital Markets will be the merchant banks. The registrar will be Link InTime Private Limited.
Also Read: What are types of IPO?
Company Financials
The following table portrays some significant financial details of the Indian Renewable Energy Development Agency. Potential investors should check the following information:
| Parameters | 31st March 2023 | 31st March 2022 | 31st March 2021 |
| Total Assets | 5,04,469.83 | 3,67,084.05 | 3,02,933.91 |
| Total Liabilities | 4,45,118.14 | 3,14,402.92 | 2,72,977.91 |
| Total Expenses | 23,437.96 | 20,403.15 | 20,882.28 |
| Total Revenue | 34,830.44 | 28,741.55 | 26,577.44 |
| Profit After Tax | 8,646.28 | 6,335.28 | 3,463.81 |
| EBITDA | 31,507.96 | 23,297.75 | 20,313.92 |
| Earnings Per Share* (Basic & Diluted) | 3.78 | 8.03 | 4.41 |
*Values in Rs. millions except earnings per share
Strengths
Here are some of the undeniable factors that have put forth IREDA as one of the leading green-financing NBFCs in India:
- IREDA has a solid track record of steady growth and profitability. Its Term Loan Outstanding is Rs. 4,70,755.21 million, which shows a CAGR of 30% over the span of the past two financial years.
- The company has managed to maintain a regionally diversified asset book. Its branches are spread over 23 states and 5 union territories.
- Being a wholly owned enterprise under the Ministry of New and Renewable Energy, the company has been able to contribute to numerous government projects and schemes. Such projects work towards reforming the RE sector.
- IREDA is also the Central Nodal Agency for multiple schemes such as Energy from Urban, Industrial and Agricultural Wastes/ Residues, which is a part of the National Bioenergy Programme (Phase I).
- India has set itself as one of the world’s fastest energy transition trajectories with its announcement of net-zero emission by 2070 and 500 GW non-fossil fuel-based capacity installation by 2030. As the largest green-financing NBFC in India, IREDA is at the forefront to capitalise on such initiatives.
Risks Involved
Along with the many strengths of IREDA, there are some risks which are integral to its type of business. Below are a few of them:
- IREDA has foreign currency-denominated borrowings that can expose it to foreign currency exchange risk. This risk arises when exchange rate movements adversely impact the value of their foreign currency-denominated assets, off-balance sheet transactions, and liabilities.
- Like any other lender, the company’s finances will suffer if it’s unable to rein in the growth of Non-Performing Assets (NPAs) in its balance sheet. Several factors such as delayed payments from DISCOMs, project delays, changes in regulations and macroeconomic events may cause borrowers to default.
Also Read: Risk of investing in IPO
Summary
Indian Renewable Energy Development Agency is a prominent name in the RE sector. It aims to utilise the proceeds from its fresh issue towards expanding its capital base to meet future capital requirements and for future lending purposes.
The PSU is yet to get SEBI’s approval for its IPO prospectus. After it receives SEBI’s green signal, IREDA will announce the tentative timelines and price band. Be on the lookout for updates on the same.
Frequently Asked Questions
SBI Capital Markets Ltd, IDBI Capital Markets & Securities Ltd, and BOB Capital Markets Ltd are the book-running lead managers for the IREDA IPO.
IREDA offers several additional services other than financing. These include non-fund-based products such as letters of undertaking, letters of comfort, guarantee assistance schemes, payment on order instruments, and consultancy services.
IREDA is a public enterprise under the administrative control of the Ministry of New and Renewable Energy.
IREDA’s annual budget is set at Rs. 35,777.35 crore for 2023-24, which is higher than Rs. 25,603.51 crore in the previous financial year.
Shri Pradip Kumar Das is the current CEO of Indian Renewable Energy Development Agency (IREDA).
