IREDA’s Rs 2,150 crore worth IPO opens for subscription on Tuesday and closes on Thursday.
The IPO consists of a fresh issue of shares worth Rs 1,290 crore and an offer for sale of Rs 860 crore by the government.
The company has fixed the price band for the IPO at Rs 30-32 a share.
IREDA is India’s largest pure-play green energy financing NBFC, and plays a strategic role in the development of renewable energy with a comprehensive suite of financial products and other value chain activities, such as equipment manufacturing and transmission.
The company has a track record of strong loan growth, geared towards high-quality assets which reflects in the improving asset quality, says Nirmal Bang Securities.
Further, IREDA intends to leverage its industry expertise to enhance its presence in new and emerging green technologies.
“Diversification and expansion in emerging green technologies like green hydrogen, pumped hydro storage power plants, battery storage value chain and green energy corridor provide scope for longer-term sustainability of high growth of its loan book,” the brokerage said.
India has set itself on one of the most accelerated energy transition trajectories in the world with the target of 500 GW non-fossil fuel-based capacity installation by 2030 and net-zero emissions by 2070.
As of September, the total installed power generation capacity stood at 425 GW, with renewable sources accounting for 42% of the total installed capacity.
Reliance Securities believes that IREDA is well placed to capitalize on the rapid growth in the renewable energy sector, and has, therefore, recommended subscribing to the IPO.
On the valuation front, the company is looking at a market capitalisation of Rs 8,600 crore at the upper end of the price band of Rs 32.
Based on annualized FY24 earnings and fully diluted post-IPO paid-up capital, the company is asking for a price-to-book (P/B) multiple of 1.02 times, which seems to be fully priced compared to its peers, said Rajan Shinde, research analyst, Mehta Equities.
Given the government’s ambitious plans for renewable energy transition and IREDA being a front runner in renewable energy financing, Shinde recommends investors to subscribe for listing gains as well as for long-term returns.
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