At a Glance
IREDA (Indian Renewable Energy Development Agency Ltd), the PSU NBFC fueling India’s green energy dream, has delivered 50%+ profit CAGR over 5 years. But with rising NPAs, zero dividends, and a recent QIP dilution, should investors still ride this electric bull?

🌟 TL;DR

• IREDA is up nearly 150% from its IPO price, peaking at ₹310 before cooling to ₹165.
• Revenue doubled in 2 years; profits up 8x in 5 years.
• ROE at 18%, NIMs steady at 32-33%, but asset quality remains a risk.
• Biggest issue: No dividends, even with record profits.
• Fair Value Range: ₹125 to ₹175, based on P/B and ROE assumptions.

📊 Growth: Electrifying or Overcharged?

Let’s not pretend: the numbers are juiced.

• 5-Year CAGR (Net Profit): 51.3% 📈
• Loan book crossed ₹60,000 Cr, fueled by rising renewable projects.

But:

• GNPA ticked up to 2.68% in FY25
• Interest capitalisation possible (👀 red flag in PSU accounting)

🧱 Balance Sheet: Powered by Debt

• Debt to Equity: 7.8x
• Net cash from ops: NEGATIVE ₹14,461 Cr in FY25 (you read that right)
• Operating cash consistently negative as disbursements explode.
• Raised ₹2006 Cr in June 2025 QIP at ₹165.14 per share.

So yes, profits are rising. But they’re riding on an Everest of debt.

🚫 Dividends: Missing in Action

Zero. Nada. Nothing. Despite profits nearly tripling since FY22:

• FY22: ₹634 Cr profit
• FY25: ₹1,699 Cr profit
• Dividend payout: 0% every year.

Investors in PSU stocks usually expect some cash back. Here? You just get love letters in the annual report.

🔍 Valuation: Is IREDA Still a Bargain?

• Current P/E: 27.3x
• Book Value: ₹38.2
• Current P/B: ~4.3x
• ROE: 18%

Let’s apply a justified Price to Book:

• Historic PSU financials trade at ~1.5x P/B (low ROE)
• Top PSU NBFCs like PFC trade around 1.2–1.8x P/B
• But IREDA has higher ROE (18%) and a green premium

📊 FV Calculation (P/B Method)

• Base Case FV = 2.5x P/B × ₹38.2 = ₹95.5
• Bull Case FV = 3.5x P/B × ₹38.2 = ₹133.7
• Optimistic Case FV = 4.5x P/B × ₹38.2 = ₹171.9

🌍 EduInvesting Fair Value Range: ₹125 – ₹175

Above that, you’re paying for too much green hope.

🌿 Green Gold or Greenwashed?

IREDA’s loan book is greener than a vegan smoothie:

• Focus on solar, wind, hydro, ethanol, EV infra
• Financed 3,068 MW solar capacity in FY24
• But:
  • Interest coverage is low
  • Debt-heavy capital structure
  • Govt shareholding still 71.76%, despite IPO + QIP

So yes, it’s India’s flagship renewable NBFC. But also very much a PSU in its blood.

👩‍💼 KMP & Management

• Chairman & MD: Pradip Kumar Das
• Under his leadership since 2020, IREDA listed, QIP raised, loan book doubled.
• But some concerns remain:
  • Delay in dividend policy
  • High share capitalisation, low EPS growth post QIP

🏛️ Final Verdict

IREDA is a rare PSU that feels like a private company in terms of growth, but behaves like a PSU when it comes to shareholder returns. If you want exposure to India’s renewable lending boom, it’s the only pure-play stock out there. But don’t expect Tesla-like multiples or startup agility.

Tags: IREDA, Indian Renewable Energy, Green NBFC, PSU Stocks, Renewable Finance, EduInvesting, IPO, QIP, Tata Power, Solar India

✍️ Written by Prashant | 🗓️ June 18, 2025