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Why did IREDA share hit the upper circuit today? 

IREDA, after being one of the successful IPO is now making significant strides with its latest business update. Read on to know more!

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Indian Renewable Energy Development Agency Limited (IREDA) has been on a remarkable trajectory, marked by substantial growth in its loan sanctions and fund distributions.

As a Public Limited Government Company under the Companies Act of 1956, IREDA plays a crucial role in promoting, developing, and extending financial assistance for Renewable energy and energy efficiency/conservation projects. It provides financial assistance to projects related to solar, wind, biomass, and other renewable energy sources, facilitating their development and deployment.

The company’s recent financial updates have spurred investor confidence, leading to a surge in its share price. Let’s delve into the numbers and factors driving this unprecedented growth.

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Record loan sanctions and disbursements

IREDA’s performance in FY24 has been excellent, with the company achieving its highest-ever loan sanctions and disbursements. In FY24, IREDA recorded loan sanctions worth a staggering ₹ 37,354 crore, representing a significant increase of 14.63% compared to the previous fiscal year. Moreover, loan disbursements stood at ₹ 25,089 crore, indicating a robust growth of 15.94% over the previous fiscal year. 

“Loan sanctions” refer to the approvals or authorisations given by IREDA to provide loans to various renewable energy projects. 

The fourth quarter of FY24 witnessed a remarkable surge in loan sanctions amounting to ₹ 23,796 crore, marking an impressive year-on-year growth of 101.7%. 

Additionally, loan disbursements for the quarter amounted to ₹ 12,869 crore, reflecting a significant increase of approximately 13.98% compared to the same quarter in the previous fiscal year.

Market response: Financial performance propels share price surge

IREDA’s strong financial performance has translated into a surge in its share price, with the stock hitting the upper circuit multiple times. 

Dec 2022Sep 2023Dec 2023
Total Revenue from operations86,897.761,17,695.911,25,319.58
Total Expenses63,427.3479,706.3786,705.88
Profit/(loss) before tax23,470.4237,989.5438,613.70
Profit/(loss) for the period20,074.6328,473.2333,553.79
Profit & Loss Statement (  in Lakhs)

The market responded positively to the company’s robust business updates, leading to a 5% jump in its share price on 02 April today. 

Strategic support: Government backing and industry influence

As the sole owner of IREDA, the Government of India plays a pivotal role in driving growth and advancement in the renewable energy sector.  The company’s strategic significance in facilitating renewable energy projects is highlighted by its steady average cost of capital attributed to government ownership. 

Also Read: The renewable energy industry in India: A game-changer for the environment

Analysts anticipate that IREDA’s strong financial footing and asset quality will facilitate future capital expenditure plans in the power industry.

Borrowing program for FY25

Looking ahead, IREDA has laid out ambitious plans for the fiscal year 2024-25. The company’s board of directors approved a borrowing program of up to ₹. 24,200 crore, which includes raising funds through various instruments such as bonds, perpetual debt instruments, term loans, and external commercial borrowings. 

This initiative reflects IREDA’s commitment to further fueling growth and supporting renewable energy initiatives in the country.

Market performance and indices

IREDA’s impressive performance hasn’t gone unnoticed in the market, as evidenced by its significant share price appreciation. Over the past six months, the company’s shares have surged by an impressive 150%, outperforming the benchmark Nifty 50 index by a wide margin. 

Despite facing temporary setbacks such as exclusion from key market indexes due to non-compliance with regulatory norms, IREDA’s growth story remains intact, drawing investors’ attention and confidence.

Also Read: The role of the energy sector in powering India’s growth.

Conclusion

IREDA’s record-breaking loan sanctions and disbursements in FY24 highlighted the company’s pivotal role in financing renewable energy projects in India. The robust financial performance, coupled with government backing and market confidence, has propelled IREDA’s share price to new heights. 

As the company continues to forge ahead with its ambitious growth plans, it remains a key player in driving the country’s renewable energy transition and sustainable development agenda.

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Hunny Meghani

A curious mind, a love for writing, and a passion for all things finance - that's me in a nutshell. Whether I'm exploring the latest stock market trends or diving into the nitty-gritty of personal finance, marketing, and AI. I'm always on the hunt for the next big story.

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