From Business Standard: 2024-07-04 11:49:07

Ireda has requested government approval for a follow-on public offer (FPO) to raise between Rs 4,000-5,000 crore for further equity infusion to sustain growth. The company also seeks inclusion under Section 54EC of the Income Tax Act to reduce borrowing costs. Net interest income (NII) in Q4FY24 rose 35% Y-o-Y to Rs 481 crore.

Despite good loan growth and funding cost management, Ireda’s net interest margin (NIM) may decline due to increasing leverage. Disbursements were strong at Rs 12,900 crore, with 14% Y-o-Y growth. The pre-provision profit rose 45% Y-o-Y to Rs 480 crore, showing sequential improvement in asset quality. Total sanctions in FY24 reached Rs 37,300 crore.

Earnings growth may not match Ireda’s high loan growth rate, leading to pressure on margins. Improvement in leverage and NIM is expected with a new equity infusion and lower borrowing costs. However, the stock’s P/BV ratio of over 3x may not be sustainable based on estimated FY25 book value. Analyst coverage is limited, with differing price targets reflecting uncertainty.



Read more at Business Standard: Renewables financier Ireda’s high valuation may limit further stock upside | Stock Market Today