IRDEA shares debut at 56% premium over IPO price; 2nd most successful PSU listing after IRCTC

After receiving overwhelming response for its initial public offering (IPO), shares of Indian Renewable Energy Development Agency (IREDA) made a stellar debut on the stock exchanges on Wednesday. The share price of miniratna company listed at 56% premium at ₹50 on the BSE and the NSE over the IPO price of ₹32 apiece. With this, IREDA became the second most successful PSU listing in the last one decade after Indian Railways Catering and Tourism Corporation (IRCTC), which debuted 101% above its IPO price in October 2019.  

Post listing, IREDA shares gained as much as 73% to hit a high of ₹55.70 on the BSE, while the market capitalisation rose to ₹14,530 crore. On the NSE, the PSU stock touched a high and low of ₹55.45 and ₹50 respectively.

IREDA 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. However, out of 22, seven PSUs 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 the stock prices more than doubling against their issue prices.

The strong listing of IREDA was better than market expectations as the state-owned company received overwhelming response for its ₹2,150-crore IPO, which opened for subscription between November 21-23. Ahead of the listing, IREDA was commanding a grey market premium (GMP) of ₹12, indicating listing to be around ₹44 (IPO price of ₹32 + today's GMP), up 37.5% over the issue price.

“The listing was above the market expectations, reflecting the strong fundamentals and growth potential of the company. IREDA's strong financial performance and focus on the burgeoning renewable energy sector make it an attractive investment proposition. The renewable energy sector is poised for significant growth in the coming years, driven by government initiatives and increasing environmental concerns,” says Shivani Nyati, Head of Wealth, Swastika Investmart.

“Investors who participated in the IREDA IPO can be pleased with the strong listing gains. The company's long-term prospects also appear promising, making it a worthwhile investment for those with a long-term investment horizon,” she adds.

The issue was subscribed 38.8 times on November 23, the final day of bidding, as investors bid for 1,827 crore equity shares against the offer size of 47.09 crore. Segment-wise, the quota for qualified institutional buyers (QIB), non-institutional investors (NIIs), and retail investors was booked 104.57 times, 24.16 times, and 7.73 times, respectively. The company had reserved 50% of the shares for QIB, 15% for NIIs, and remaining 35% for retail investors. The Mini-Ratna PSU, which had set aside 18.75 lakh shares for its employees, received 9.8 times bids for this portion.

The issue of the power sector focused financing company 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. Ahead of the IPO, the company raised ₹643.26 crore by allotting 20,10,19,726 equity shares to a total of 58 anchor investors, including 13 mutual funds.

The company intends to use net proceeds from the fresh issue to augment the company’s capital base to meet future capital requirements and onward lending.

Incorporated in March 1987, IREDA, under the Ministry of New and Renewable Energy (MNRE), is a power sector non-bank financial company (NBFC) primarily focusing on financing power generation, transmission, distribution, and other activities. It provides a comprehensive range of financial products and related services, from project conceptualization to post-commissioning, for RE projects and other value chain activities such as equipment manufacturing and transmission. 

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