Shares of the Indian Renewable Energy Development Agency (IREDA) saw a notable decline of over 8 percent during intra-day trading on Friday, February 28. This drop occurred as the company’s stock began trading in the Futures & Options (F&O) segment with the commencement of the March series. The sharp decline followed a 4 percent drop in the previous trading session, bringing the total decrease for the month of February to 25 percent. This marked IREDA’s steepest monthly fall since it was listed in December 2023, signaling increased volatility in its stock price. On the same day, the stock touched a low of ₹151.55, reflecting an 8.5 percent drop from the previous day’s close.
The stock’s decline has been significant when compared to its all-time high of ₹310, which was reached in July 2024. From that peak, IREDA shares have fallen by more than 51 percent, underlining the sharp correction it has undergone. Despite this steep decline from its highs, the company’s stock still reflects positive performance in the broader context, showing an 11.5 percent gain over the past year. This suggests that while recent market conditions have impacted its stock, IREDA continues to display resilience in its long-term growth trajectory.
IREDA made its debut in the stock market with an initial public offering (IPO) price of ₹32. The stock experienced an immediate surge post-listing, reaching ₹214 within just a few days, reflecting strong initial investor interest. However, this upward momentum was followed by a significant pullback, with the stock retracing to around ₹100 by March 2024. This retracement marked a substantial drop from its earlier highs, but from March to July 2024, IREDA shares saw a remarkable rally. Over this period, the stock nearly tripled in value, reaching an all-time high of ₹310 in mid-July. This surge was impressive, as it represented a nearly tenfold increase from its original IPO price, underscoring the stock’s high-growth potential, albeit with volatility.
In recent corporate developments, IREDA shareholders approved a ₹5,000 crore fundraising plan through a Qualified Institutional Placement (QIP). This initiative is expected to lead to up to a 7 percent dilution of the government’s stake in the company post-issuance. Along with the fundraising, the company made amendments to its Articles of Association after receiving Navratna status, a recognition that provides it with greater operational autonomy and strategic flexibility. The move is aimed at strengthening IREDA’s position in the market and enabling it to pursue more aggressive growth strategies going forward.
From a financial perspective, IREDA has delivered strong performance for the third quarter of FY25. The company reported a 27 percent year-on-year increase in its net profit, which rose to ₹425 crore. This growth was driven by a 36 percent increase in revenue, which reached ₹1,698 crore. The company also benefitted from a reduction in its borrowing costs, with the cost of borrowing falling from 7.82 percent in the previous year to 7.68 percent. This decrease in borrowing costs positively impacted IREDA’s profitability, while the net interest margin expanded to 3.33 percent, reflecting improved financial health and efficiency.
Despite the positive financial performance, IREDA experienced a significant rise in its total expenses during Q3FY25. Expenses increased by 33.8 percent, reaching ₹1,160.78 crore. While this increase is notable, the company was successful in improving its asset quality. IREDA’s gross non-performing assets (NPAs) saw a reduction, dropping from 2.90 percent in the same quarter of the previous year to 2.68 percent. This improvement in asset quality indicates that the company has made meaningful progress in managing and mitigating credit risks, contributing to its financial stability.
In conclusion, while IREDA’s stock has faced significant volatility, the company has demonstrated solid performance on both operational and financial fronts. The recent drop in share price has come after a period of strong growth, but the company continues to show resilience with positive yearly gains. With strategic steps like the QIP fundraising and the enhancement of its operational capabilities through Navratna status, IREDA appears well-positioned for future growth, though the market will likely remain focused on how the company navigates the challenges of maintaining its growth trajectory amid market fluctuations.