From ₹32 to ₹102: IREDA shares surge 219% from IPO price in 10 sessions

Shares of state-owned Indian Renewable Energy Development Agency (IREDA) surged 20% to hit its upper circuit limit of ₹102.2 in intraday trade on Tuesday, in an otherwise bearish broader market. Since listing on November 29, the share price of Miniratna company has zoomed 219% over the initial public offering (IPO) price of ₹32 apiece, with IREDA shares rising in eight out of the last ten sessions. This means, investors, who bought shares in the IPO and continues to hold them, has seen a massive growth of 219% in their investment.

Extending gains for the 5th straight session, IREDA shares opened higher at ₹93.31, up 9.75% against the previous closing price of ₹85.02 on the BSE. During the session, the largecap stock rallied as much as 20%, while the market capitalisation increased to ₹27,049 crore.

The PSU stock made a strong debut on the domestic bourses on November 29, 2023, after receiving overwhelming response for its ₹2,150-crore IPO, which opened for subscription between November 21-23. The three-day IPO of IREDA was subscribed 38.8 times as investors bid for 1,827 crore equity shares against the offer size of 47.09 crore. The issue was a combination of a fresh issue of 40.31 crore shares and an offer for sale of 26.87 crore shares by existing shareholders at a price band of ₹30-32 per share.

Investors rushed to buy IREDA shares amid strong fundamentals and growth potential as the company focuses on the burgeoning renewable energy sector, which makes it an attractive investment proposition. The company, a power sector non-bank financial company (NBFC), provides a comprehensive range of financial products and related services, from project conceptualisation to post-commissioning, for renewable energy projects and other value chain activities such as equipment manufacturing and transmission. 

Incorporated in March 1987, IREDA, which comes under the Ministry of New and Renewable Energy (MNRE), is the first PSU to list on stock exchanges after a long gap of 17 months post LIC's market debut in May 2022. As many as 22 PSUs went public since 2010, but most of them disappointed investors in terms of higher returns on investments. Out of 22, around seven companies including Rail Vikas Nigam (RVNL), IRCTC, Bharat Dynamics, MSTC, Mazagon Dock Shipbuilders, RITES, and Mishra Dhatu Nigam have managed to deliver strong returns to investors, with stock prices more than doubling against their issue prices.

Last week, IREDA launched its retail division as part of its strategic initiative to enhance emphasis on providing loans to borrowers in the PM-KUSUM scheme, Rooftop solar, and other business-to-consumer (B2C) sectors. Shortly after opening on December 5, IREDA’s retail division sanctioned its first loan amounting to ₹58 crores under KUSUM-B, underscoring IREDA's dedication to emerging as the preferred lender in new segments, mirroring its success in other renewable energy sectors, says Pradip Kumar Das, Chairman & Managing Director.

Das also proposes a stride towards sustainable investing by suggesting a 1-2% assets under management (AUM) allocation for domestic pension and insurance funds into renewable energy (RE) bonds. This strategic move aims to deepen bond markets, fostering increased global and local investments, he adds.

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