IREDA Share Price: Multibagger PSU Stock In Focus On Q2 Earnings; To Set Up Retail Business Subsidiary; Check

The shares of the Indian Renewable Energy Development Agency (IREDA) continued their upward march, gaining over 1% in a weaker market, as investors celebrated the PSU's robust fiscal second-quarter earnings. The state-owned renewable energy financing entity reported a 36% year-on-year (YoY) increase in net profit, reaching Rs 387.75 crore for the July-September period.

IREDA, India's largest pure-play green financing Non-Banking Financial Company (NBFC), recorded an impressive 38% YoY growth in total income from operations, which stood at Rs 1,630.38 crore for the second quarter. Additionally, its Net Interest Income (NII) surged by 52% YoY, reaching Rs 546.8 crore.

The stock market responded positively to IREDA's stellar performance. At open, the company's stock was trading 1% higher at Rs 236.43 on the National Stock Exchange (NSE). The stock has been a strong performer throughout 2024, skyrocketing approximately 125%, compared to Nifty's more modest 14% growth during the same period.

Growth in Loan Book and Sanctions
IREDA's loan book also saw significant expansion in Q2 FY25, growing by 35.88% YoY to Rs 64,564 crore. This growth underscores the company's aggressive push towards financing green projects across India, aligning with the country's renewable energy goals. Commenting on the results, IREDA's Chairman and Managing Director, Pradip Kumar Das, remarked, "Q2 results reflect our unwavering dedication to advancing India's renewable energy goals. The substantial growth in loan sanctions and disbursements underscores the company's commitment to supporting green projects across the nation."

Stable Asset Quality and Financial Metrics
In terms of asset quality, IREDA managed to maintain stability in the second quarter. The company's Gross Non-Performing Assets (NPA) remained unchanged at 2.19%, while its Net NPA stood at 1.04%. This demonstrates IREDA's effective risk management and consistent performance in maintaining the quality of its assets. The company's debt-equity ratio also remained stable at 5.85x, marginally higher than 5.83x in the previous quarter.

New Subsidiary to Expand Retail Business
IREDA announced on October 10 that it had received approval from the Department of Investment and Public Asset Management (DIPAM) and the Ministry of New and Renewable Energy to establish a wholly-owned subsidiary. This new arm will focus on the retail side of the renewable energy business, encompassing key initiatives like the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM KUSUM) scheme, rooftop solar, and consumer-driven segments such as electric vehicles, energy storage, green technologies, and energy efficiency.

By expanding into the retail segment, IREDA aims to tap into a growing demand for renewable energy solutions among individual consumers.

Long-Term Gains and Multibagger Status
Since its listing in November 2023, IREDA has delivered a staggering 293% return, nearly quadrupling investors' capital. This stellar performance has outpaced Nifty, which has risen only 26% during the same period. Investors who believed in IREDA's potential early on have been richly rewarded as the stock continues to exhibit strong growth momentum.

Despite the broader market showing signs of weakness, IREDA has consistently outperformed, largely due to its strategic focus on financing renewable energy projects, which are increasingly becoming a priority in India's energy landscape.

IREDA's investor presentation for the second quarter of FY25 highlighted several key metrics:
The yield on Loan Assets stood at 9.92%, slightly up from 9.77% in Q2 FY24.
Cost of Borrowings was at 7.8%, marginally lower than the 7.85% recorded in Q2 FY24.

As of 10:55 am on Friday, IREDA's stock was trading with a minor gain of 0.20% at Rs 234.10 per share on the NSE. The stock's 125% rally this year highlights its status as a multibagger, offering substantial returns to long-term investors. Market analysts expect the stock to continue its upward trajectory.