Shares of state-run Indian Renewable Energy Development Agency (IREDA) made a stellar debut on the exchanges today. On the NSE and BSE, IREDA share prices were listed at ₹50 apiece, 56.25% higher than the issue price of ₹32. Despite the strong gain, the shares moved forward and hit a high of ₹ 55.70, up 74% when compared to the issue price.
Keep it or book profit?
Shivani Nyati, Head of Wealth, at Swastika Investment, said that the listing was above the market expectations, reflecting the strong fundamentals and growth potential of the company.
“IREDA's strong financial performance and focus on the burgeoning renewable energy sector make it an attractive investment proposition. The renewable energy sector is poised for significant growth in the coming years, driven by government initiatives and increasing environmental concerns," she said.
"Investors who participated in the IREDA IPO can be pleased with the strong listing gains. The company's long-term prospects also appear promising, making it a worthwhile investment for those with a long-term investment horizon,” added Nyati.
Prashanth Tapse, Senior VP (Research), Mehta Equities said that short-term investors are advised to consider booking profits above the expected gain, while long-term investors are encouraged to hold for future potential. “Mehta Equities suggests accumulating IREDA post-listing dips for promising long-term returns, extending an opportunity for those who missed the public offer,” he said.
He added that as NBFC's financial autonomy is expected to boost its competitive edge and positioned as India's largest green financing NBFC, IREDA aligns with the nation's ambitious renewable energy goals.
Strong Subscription Level
IREDA’s initial public offering (IPO) had received a strong response and was subscribed 38.80 times.
Investors placed bids for 1,827 crore equity shares against the offer size of 47 crore shares. Other IPOs such as Tata Technologies Ltd, Flair Writing and Gandhar Oil have also witnessed high subscription levels and are expected to give strong listing gains.
The buying for IREDA’s public issue was led by the Qualified institutional buyers (QIBs) as they bought 104.57 times their allotted quota. The portion for high net worth individuals (HNIs) was booked 24.16 times. The remaining 35% of the offer is kept for retail investors, who booked 7.73 times their allotted quota.
Most brokerages had given a subscribe rating to the issue owing to consistent growth in loan books, healthy return ratios, and varied financial products.
“At the upper price band of ₹32, IREDA is available at an P/B of 1.4x (FY23), which is at a discount to its peers. Power-financing NBFCs are expected to continue this growth momentum, and this growth is likely to be driven by an increase in power demand, a rise in population, renewable integration, and the sustainability goals of the country. With consistent growth in loan books, healthy return ratios, and varied financial products, IREDA is well-placed to capitalize on the growth in the RE sector. We assign a 'Subscribe' rating on a medium- to long-term basis,” said analysts at Geogit Financial Services.