IREDA jumps 5% on green power co-finance deal with Indian Overseas Bank

Shares of Indian Renewable Energy Development Agency (IREDA) bucked the market trend to zoom over 5 percent on January 17 to an all-time high of Rs 125.60 on the NSE. The rise comes a day after the company announced a partnership with Indian Overseas Bank (IOB) to co-finance renewable energy projects in India.

The agreement, signed in presence of IREDA Chairman and Managing Director Pradip Kumar Das and IOB Managing Director and Chief Executive Officer Ajay Kumar Srivastava, sets the stage for co-lending and loan syndication for a diverse spectrum of renewable energy projects across the country, IREDA said.

“The partnership aims to streamline loan syndication and underwriting processes, management of Trust and Retention Account (TRA) for IREDA borrowers, and work towards fixed interest rates over a 3-4-year period for IREDA borrowings,” said Das.

Follow our market blog to catch all the live action

This collaboration builds upon IREDA’s partnerships with other financial institutions, including Bank of Baroda, Bank of India, Union Bank of India, India Infrastructure Finance Company Limited and Bank of Maharashtra, he added.

IREDA is a non-banking financial institution under the Ministry of New and Renewable Energy, engaged in promoting, developing and extending financial assistance for setting up projects related to new and renewable sources of energy and energy efficiency and conservation.

At 10:21am, the IREDA shares were trading 4.8 percent higher at Rs 125.25 on the National Stock Exchange (NSE). The stock listed on November 29 at Rs 50 on the NSE at a premium of 56.25 percent over the IPO price of Rs 32. The stock was trading 150 percent higher from its listing price and 310 percent above its issue price.

Analysts at Phillip Capital believe IREDA will see strong loan growth over FY23-26 on rising demand for renewable energy in the country. However, the earnings growth is not expected to match the loan growth due to pressure on margins and normalisation of credit costs (which was negative in H1 FY24), they said.

While loan growth is high, return ratios are weak and there is higher exposure to the private segment, which undermines conviction, the brokerage noted. “We believe the best is already priced in,” it said while initiating coverage on the stock with a ‘sell’ rating and target price of Rs 80.

Also read | IREDA, Indian Overseas Bank ink pact to co-finance renewable energy projects

IREDA is among the top contenders likely to make it to the MSCI Smallcap index, according to Nuvama Alternative & Quantitative Research. MSCI will make the official announcement on February 13, with adjustments set to take place on February 29.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.