Subscribe for real-time financial insights on Trade Target’s WhatsApp Channels
Hola!
Before we look at the IREDA share analysis, let’s quickly understand IREDA and some interesting facts about the company. By the end of this blog, you will have a clear idea of IREDA Stock.
Let’s start…
IREDA Or Indian Renewable Energy Development Agency
IREDA is a government owned enterprise in India functioning under the Ministry of New and Renewable Energy. IREDA’s mission is to promote, develop and commercialize new and renewable energy sources, providing financial support for energy efficiency and conservation projects.
In June 2015, Government of India awarded IREDA the status of Mini Ratna Category I. RBI has also classified it as an Infrastructure Finance Company, making it the largest green financing NBFC in the country. IREDA offers a wide range of financial products and services for renewable energy projects, from planning to post commissioning as well as for related activities such as equipment manufacturing and transmission.
IREDA has financed projects in various renewable energy sectors including solar, wind, hydropower, transmission, biomass, waste to energy, ethanol, compressed biogas, hybrid renewable energy, energy efficiency and green mobility. In February 2024, IREDA signed an agreement with IIT Bhubaneswar to promote clean energy innovation. RBI has also granted IREDA permission to set up a subsidiary in GIFT City, Gujarat.
Historical Performance of IREDA Shares
- On November 23
IREDA launched its IPO aiming to raise ₹2,150.21 cr. IREDA IPO included both a fresh issue and Offer for Sale, priced between ₹30 – ₹32 per share. IREDA IPO was subscribed 38.80 times.
- On the listing day
IREDA shares debuted at ₹50 on NSE and BSE which was 56.25% higher than the issue price of ₹32. Later the shares surged 87.5% in intraday to ₹60 on NSE before closing at the day’s high.
- Before the IPO
President of India through Ministry of New and Renewable Energy and 7 nominees held 100% of IREDA’s equity share capital. After the listing, the promoter’s stake was reduced to 75%.
- Since its IPO
IREDA share price has increased hugely reaching a high of ₹310 in July 2024, an 886% rise from the IPO price of ₹32. At the time of writing this blog on 28 July 2024, Ireda stock price is trading at ₹258.
Government Initiatives Towards Solar Sector
Prime Minister recently launched Pradhan Mantri Suryoday Yojana, aiming to equip 1crore households across India with rooftop solar panels. This initiative, launched during the Ram Lalla Pran Pratishtha ceremony in Ayodhya aims to reduce electricity bills for the poor and middle class while promoting self-reliance in the energy sector.
After the Ayodhya ceremony, PM Modi highlighted the importance of using solar energy to generate electricity. The initiative aligns with India’s commitment to clean and sustainable energy, building on the earlier Rooftop Solar Programme launched in 2014 which aimed for 40 gigawatts (GW) of installed capacity by 2022. As of December 2023, India has achieved approximately 73.31 GW of solar powe, with 11.08 GW from rooftop solar.
2023-2024 Union Budget increased funding for the Ministry of New and Renewable Energy by 48%, from ₹7,033 crore to ₹10,222 crore supporting further solar power initiatives. Additionally, the PM Surya Ghar Muft Bijli Yojana aims to install rooftop solar plants for one crore households offering up to 300 units of free electricity monthly, with over 14 lakh applications already received.
Investors and traders can benefit from these government initiatives by investing in the best solar stocks. For your reference, we have added the link to the top solar stocks below.
How Do IREDA Shares Look on the Chart?
The chart above shows the weekly performance of IREDA shares, providing a clear picture of the stock’s past and current momentum. As discussed, IREDA stock has delivered substantial returns to its investors, rising from its IPO price of ₹32 to a high of ₹310. It is still trading well above its IPO price. Several factors, such as government support and vision for the solar and energy sector, have contributed to the stock’s upward movement.
After reaching the peak of ₹310, the stock has seen some profit booking. However, the long term trend remains bullish. Four weeks ago, the stock broke through the ₹200 level with volume and quickly jumped from ₹200 to ₹300 in just two weeks. Currently, investors are booking profits leading to a corrective phase. The previous resistance level of ₹200 may now act as support. As long as ireda stock stays above ₹200, the bullish trend remains intact. If the stock falls below this level with volume, it could drop to the ₹150-60 range.
Investors may see some profit booking or correction, but IREDA remains a strong stock in a promising sector for the long term. However, it’s important to remember that investors should not base their decisions solely on charts. It’s crucial to consider the company’s fundamentals, especially for long term investments.
Analyst View on IREDA Share
PhillipCapital a brokerage firm has issued a note on IREDA stock with a Sell recommendation and a price target of ₹130. This suggests a potential downside of about 60% from the record high level. According to PhillipCapital, the recent surge in IREDA’s stock price was driven by passive investments rather than strong fundamental reasons and they believe the current price already reflects the positive factors.
Conversely, Sumeet Bagadia, Executive Director at Choice Broking, maintains a positive outlook on IREDA’s share price. He notes that the stock is currently facing minor resistance at ₹300 per share. Bagadia expects that if this level is surpassed the share price could quickly rise to ₹350. He also advises investors to set a stop loss at ₹250 to limit potential losses.
Let’s take a look at some fundamental analysis of IREDA shares.
IREDA Share Fundamental Analysis
- Revenue has steadily increased from ₹2,655 crore in March 2021 to ₹4,965 crore in March 2024.
- Financing Profit has also grown from ₹590 crore in March 2021 to ₹1,716 crore in March 2024.
- Net Profit saw a rise from ₹346 crore in March 2021 to ₹1,252 crore in March 2024.
- Earnings Per Share fluctuated with 4.42 in March 2021 dropping to 2.77 in March 2022 and then increasing to 4.66 in March 2024.
Financial Ratios of IREDA Stock
- Return on Equity increased from 12.56% in March 2021 to 17.28% in March 2024, indicating improved profitability relative to shareholder’s equity.
- Return on Capital Employed showed a slight upward trend moving from 8.33% in March 2021 to 9.29% in March 2024 reflecting better efficiency in using capital.
Earnings Per Share fluctuated starting at ₹4.42 in March 2021 dropping to ₹2.77 in March 2022 and then rising again to ₹4.66 in March 2024 indicating variable profitability on a per share basis.
Shareholding Pattern of IREDA Share
As of December 2023, promoter’s holding was at 75.00%, FIIs at 1.88%, DIIs at 4.37% and public at 18.75%. By March 2024, promoters still held 75.00%, FIIs decreased to 1.36%, DIIs to 0.94%, and public increased to 22.70%. In June 2024, promoters remained at 75.00%, FIIs rose to 2.70%, DIIs decreased to 0.42%, and public adjusted to 21.87%.
Final Words
We’ve provided a detailed analysis of IREDA’s stock performance, Ireda chart analysis and government initiatives in the energy sector to assist you in making informed decisions about investing in renewable energy stocks. However, it’s essential to conduct your own fundamental and technical analysis before investing in IREDA stock.
We look forward to bringing you more interesting blogs soon. We welcome your feedback and suggestions on this blog and future topics.
Happy investing and thank you for reading!
Disclaimer:
This website content is only for educational purposes, not investment advice. Before making any investment, it’s important to do your own research and be fully informed. Investing in the stock market includes risks, and you should carefully read the Risk Disclosure documents before proceeding. Please remember that past performance doesn’t guarantee future results, and due to market fluctuations, your investment goals may not always be achieved.
