Share price of IREDA rises 4% as shareholders approve ₹5,000 crore QIP

Market Performance

Shares of the Indian Renewable Energy Development Agency (IREDA) increased 4 per cent, reaching Rs 178 per share on February 25. This rise follows shareholder approval for a Qualified Institutional Placement (QIP) to raise Rs 5,000 crore. Despite this, the company's stock has declined over 20 per cent year-to-date, underperforming against the Nifty 50 index, which recorded a 5 per cent drop over the same period.

Shareholder Approval for Fundraising

IREDA received authorization from shareholders during its 22nd Extraordinary General Meeting (EGM) to proceed with the QIP initiative. As per an official exchange filing, all proposed resolutions outlined in the EGM notice were passed as special resolutions with the necessary majority.

The capital raise, structured to be executed in one or multiple phases, involves diluting the Government of India's stake in the company by up to 7 per cent post-issuance.

Expansion into Derivatives Market

As per a National Stock Exchange (NSE) circular, IREDA will be included in the futures and options (F&O) segment starting with the March series. This inclusion, effective February 28, is expected to enhance trading activity in the company's derivatives segment. The February F&O series is scheduled to conclude on February 27.

Financial Performance

Third-Quarter Highlights

• Gross Non-Performing Assets (NPAs): Increased by 30.4 per cent sequentially.
• Net NPAs: Rose by 53.75 per cent to Rs 1,024 crore.
• Net Interest Income (NII): Grew by 39 per cent year-on-year.
• Net Profit: Net profit surged by 27 per cent to reach ₹425.4 crore.

Conclusion

The approval for QIP fundraising marks a significant development for IREDA, potentially enhancing its ability to finance renewable energy projects. Additionally, its inclusion in the F&O segment may increase market participation. However, financial challenges persist due to rising NPAs, even as net profits and interest income show positive trends.