IREDA Increases Borrowing Limit for FY25: Market Performance and Financial Insights

Market Performance

Shares of the Indian Renewable Energy Development Agency (IREDA) rose by over 4% on March 18, ending a six-day losing streak. The stock had been experiencing a continuous decline and was nearing its 52-week low of ₹124 per share, considerably lower than its 52-week high in July of the previous year.

Key Announcement

On March 17, after market hours, IREDA disclosed in an exchange filing that its board approved an increase in its borrowing limit for 2025. The limit has been raised by ₹5,000 crore, bringing the total borrowing capacity to ₹29,200 crore from the previous ₹24,200 crore. The company plans to secure these funds through various financial instruments, including taxable bonds, perpetual debt instruments, bank term loans, lines of credit from international agencies, external commercial borrowing, and short-term bank loans.

Financial Performance

IR EDA'sIREDA's financial results for the December quarter highlighted some challenges related to asset quality:

• Gross Non-Performing Assets (NPAs): Increased by 30.4% compared to the previous quarter.
• Net NPAs: Rose by 53.75% sequentially to ₹1,024 crore.
• Net Interest Income (NII): Recorded a 39% year-on-year increase.
• Net Profit: Grew by 27% to ₹425.4 crore.

Fundraising Plans

In February, the company approved a plan to generate ₹5,000 crore through a Qualified Institutional Placement in multiple tranches. This initiative is expected to reduce the government's stake in IREDA by up to 7%.

Derivatives Market Inclusion

IREDA recently gained traction in the stock market after being included in the futures and options (F&O) segment by the National Stock Exchange (NSE) from the March series. This inclusion expands trading opportunities for market participants.

Summary

IREDA's decision to increase its borrowing limit aims to strengthen its financial position amid recent market fluctuations. While the company continues to face asset quality challenges, its net interest income and net profit growth indicate financial stability. The planned QIP and inclusion in the F&O segment further reflect its strategic steps toward expansion and enhanced market presence.