Indian Renewable Energy Development Agency Ltd. (IREDA) delivered positive results for the first quarter (April-June) of FY24, showcasing both profit growth and improved asset quality.
Strong Financials and Profit Growth
According to the company’s profit-and-loss statement filed with the Bombay Stock Exchange (BSE), IREDA’s net profit for the quarter reached ₹383.69 crore, marking a significant 30% increase compared to ₹294.58 crore in the corresponding quarter of the previous fiscal year. This positive performance also surpasses the ₹337 crore net profit reported in the preceding March quarter (Q4 FY23).
Improved Asset Quality
IREDA’s asset quality metrics also demonstrated improvement on a sequential basis. Gross Non-Performing Assets (GNPAs) as a percentage of total loans decreased to 2.19% at the end of June 2024, down from 2.36% at the end of March 2024. Similarly, Net NPAs, which represent a more stringent measure of loan delinquency, showed a marginal decline to 0.95% from 0.99% in the previous quarter.
Furthermore, IREDA’s debt-to-equity ratio, a key indicator of financial leverage, improved to a healthier level of 5.83x at the end of June 2024, compared to 6.35x a year ago. This signifies a more balanced capital structure for the company.
Strong Loan Growth and Potential FPO
Earlier in the quarter, IREDA had already released a business update highlighting robust loan activity. Loan sanctions during the April-June period surged to ₹9,136 crore, a remarkable increase of 481% compared to ₹1,893 crore sanctioned in the same period last year. Loan disbursements also witnessed a significant rise of 67.6%, reaching ₹5,320 crore, further contributing to loan book growth. IREDA’s total loan book stood at ₹63,150 crore at the end of June 2024, reflecting a healthy growth of 33.8% year-over-year.
In a recent interview with CNBC-TV18, IREDA Chairman and Managing Director (CMD) Pradip Kumar Das indicated the company’s plans to raise equity capital through a Follow-on Public Offer (FPO), subject to government approval. The anticipated FPO size could range between ₹4,000 crore and ₹5,000 crore. Das further elaborated that while the request for the FPO has already been submitted to the government, the process may take time. The potential timeline for the FPO issuance falls between November 2024 and February 2025.
Additionally, IREDA has sought inclusion under Section 54EC of the Income Tax Act from the Ministry of Finance. This inclusion, if approved, could benefit IREDA by reducing its borrowing costs, making the company a more attractive investment proposition.
Stock Performance
IREDA’s share price reached a record high of ₹304.6 on Friday before experiencing a slight correction. The stock closed the day marginally higher at ₹284.65.
Overall, IREDA’s Q1 results demonstrate a strong financial performance with profit growth and an improving asset quality profile. The company’s proactive approach to capital raising and potential tax benefits further suggest a positive outlook for future growth.
