Here’s all you need to know about India’s first PSU issue in 18 months

The Initial Public Offering of Indian Renewable Energy Development Agency (IREDA) opens for subscription on Tuesday (November 21). The issue will close on Thursday, November 23.

Ahead of the IPO, the company has mobilised ₹643 crore from anchor investors.

IREDA’s IPO comprises of a fresh issue of 40.3 crore shares along with an Offer for Sale of 26 crore shares of face value of 10 each. Price band for the issue has been fixed between 30 – 32 per share and investors can bid in lots of 460 shares and in multiples thereof.

At the current price band, the post issue implied market capitalisation of the company would range between 8,063 crore and 8,601 crore.

Here’s a look at the SWOT analysis of the company:


  • IREDA is the largest pure-play green financing NBFC in India currently. Green Financing is any structured financing that aligns with global efforts to combat climate change and a transition to a low-carbon economy.
  • The company also has a diversified portfolio as no state forms more than 16% of the overall loans, thereby preventing a state or regional concentration.
  • IREDA was also upgraded to Schedule A from Schedule B in the list of CPSE’s by the Department of Public Enterprise in September this year. All CPSE’s required to be categorised into four schedules from A to D and that has implications for the organisational structure and salary of board level incumbents of the concerned company.
  • Weaknesses

  • The company’s return ratios are weak with low Net Interest Margins (NIMs). Its spreads are also lower than peers like REC and PFC. What is also lower compared to REC and PFC is the company’s Provision Coverage Ratio.
  • IREDA’s write-offs have been higher than the slippages, which has aided in improvement of its asset quality. This shows that the recovery mechanism is weak.
  • It is also not in compliance with international lines of credit under their financing documents, including with the Asian Development Bank, in relation to maintaining their Gross NPA levels.
  • The company also had negative cash flows in the past, which only turned positive in the first half of the current financial year ahead of its IPO.
  • Opportunities

    IREDA would look to take advantage of the large scale opportunities present in the renewable energy sector. A recent study estimates a funding requirement of $223 billion over the next eight years just to meet solar and wind capacity targets of 2030.


  • An increase in cost of funds can hurt IREDA’s margins. Book quality and credit costs can also be impacted by the health of Discoms.
  • The company’s book is subject to inspection from the Reserve Bank of India. The last inspection was done in 2022.
  • Brickwork Ratings moved its rating to “Issuer Not Cooperating” in July 2023.
  • Downward revision in tariff can hurt discoms, which will impact repayments to the company.
  • Here’s how IREDA compares with its other listed peers like REC & PFC:

    Peer Comparison IREDA REC PFC
    Net Interest Margin 3.36% 3.45% 3.37%
    Spread 2.22% 2.74% 2.51%
    Provision Coverage Ratio 48.11% 69.37% 72.82%
    Gross NPA 3.13% 4.39% 3.67%
    Net NPA 1.65% 0.96% 1.00%
    Price to Book Value 1.09x 1.46x 1.44x

    Here’s how the company’s asset quality has fared:

    Asset Quality FY22   FY23   H1FY23   H1FY24
    Gross NPA 1,768.25 1,513.35 1,708.77 1,486.08
    Net NPA 1,035.39 768.02 895.74 771.08
    Gross NPA (%) 5.2 3.2 5.1 3.1
    Net NPA (%) 3.1 1.7 2.7 1.7
    Provision Coverage Ratio (%) 41.5 49.3 47.6 48.1

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