The IREDA, a government financial organization, is coming up with its IPO, which will be the first PSU IPO in 18 months. IREDA IPO is a fresh issue of 40.3 crore shares and an offer of around 26 crore for sale.
If you want to know about this IPO, here are ten things you must know about the company and the IPO.
| IPO Open Date | Tuesday, November 21, 2023 |
| IPO Close Date | Thursday, November 23, 2023 |
| Face Value | Rs.10 per share |
| Price Band | Rs.30 to Rs.32 per share |
| Basis of Allotment | Wednesday, November 29, 2023 |
| Initiation of Refunds | Thursday, November 30, 2023 |
| Credit of Shares to Demat | Friday, December 1, 2023 |
| Listing Date | Monday, December 4, 2023 |
| Cut-off time for UPI mandate confirmation | 5 PM on November 23, 2023 |
| Total Issue Size | 671,941,177 shares (aggregating up to Rs.2,150.21 Cr) |
| Fresh Issue | 403,164,706 shares (aggregating up to Rs.1,290.13 Cr) |
| Offer for Sale | 268,776,471 shares of Rs.10 (aggregating up to Rs.860.08 Cr) |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE, NSE |
About the Business
IREDA, or Indian Renewable Energy Development Agency, is a government-run financial organization that looks after renewable energy businesses’ financial needs and development requirements. Some of the significant projects IREDA is taking care of include –
- National Bioenergy Program’s Programme on Energy from Urban, Industrial, and Agricultural wastes or residues. This was launched a year back in November 2022, and its entire outlay for Phase I is around Rs. 6 billion.
- A Rs. 1.58 billion project or scheme for supposing manufacturing of briquettes and pellets and others.
IREDA closely works with the Government of India (GoI) to finance renewable energy projects varying from solar energy to biomass, industrial co-generation, and much more. The company offers a wide range of financial products and services, including non-fund-based products such as letters of undertaking, letters of comfort, and others.
Financial Performance
- Total Income: In FY21, the company’s total income stood at Rs. 26577.44 million, which increased to Rs. 28741.55 million in FY22, and in FY23, it surged to Rs. 34830.44 million. It has risen around 31.05% in these years.
- PAT: Similar to the income, the profit after taxation (PAT) has increased from Rs. 3463.81 million in FY21 to Rs. 8646.28 in FY23. However, the increase in profit is much higher than its increase in the total income.
- Net Interest Income (NI): This is a crucial metric, a substantial share of a financial service’s income. NII has increased from Rs. 9922.15 million in FY21 to Rs. 13237.65 in FY23.
- Total Debt-to-Net Worth: This ratio has decreased over the past three years. From 8.01% in FY21, it has dropped to 6.77% during FY23. However, in FY22, the ratio dropped to 5.24% as well.
IPO Details
The IPO opens today, on 21 November 2023, and will close on 23 November 2023. It is a combination of both fresh issues and OFS. The proceeds from the fresh issue are proposed to be used in 2024 and 2025. It will be used primarily for -Onward lending and Meeting future capital requirements
SWOT Analysis
- Strengths
- IREDA is currently the most significant pure-play green financing NBFC in the country.
- The organization has a well-diversified portfolio with less than 16% loans for each state.
- On top of that, this organization has been categorized as Schedule A CPSE.
- Weakness
- IREDA lending products are not compliant with international lines of credit.
- The organization’s net interest margins (NIMs) are low.
- Opportunities
- The estimated funding requirement in the renewable energy sector is around $223 billion in the coming eight years.
- Investors becoming conscious of their investment choices
- Threats
- Strict supervision of RBI
- The increasing cost of funds
Wrapping up
After 18 months, an Indian PSU IPO that investors have been waiting for opened today. The best thing about this IPO is that IREDA is working towards a better and sustainable future. Investors are also becoming conscious about their investment choices. Remember, you must do your due diligence before you decide.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.