The Indian Renewable Energy Development Agency (IREDA) has made significant waves in the Indian stock market following its impressive Q1 results for 2024. As the first PSU company to declare its quarterly earnings this season, IREDA has set a positive tone for the financial sector, particularly in banking and finance.
IREDA reported a 30% year-on-year (YoY) increase in profit after tax (PAT) and a 32% rise in operational revenue for the June 2024 quarter. This robust performance has led to a surge in the company's share price, with shares hitting a record high of 310 on the Bombay Stock Exchange (BSE).
Q1 Results and Financial Performance
The company's financial health is evident from its Q1 results, where IREDA reported a PAT of 383.69 crore, up from 294.58 crore in the corresponding period of the previous financial year. Additionally, the company saw a 386% YoY rise in sanctioned loans, indicating strong growth in its lending activities.
IREDA's Assets Under Management (AUM) also rose by 34% year-on-year, and the asset quality showed an improvement on a sequential basis. These metrics highlight the company's sound financial and business condition.
Expert Predictions and Share Price Targets
Stock market experts are bullish on IREDA's future performance, predicting a significant upside in the share price. Avinash Gorakshkar, Head of Research at Profitmart Securities, and Sumeet Bagadia, Executive Director at Choice Broking, both anticipate that IREDA's share price could reach 350 per share in the near term. This optimism is driven by the company's robust quarterly numbers and the potential benefits from the Production Linked Incentive (PLI) scheme, which may be announced in the upcoming Union Budget 2024.
Bagadia advises existing shareholders to hold onto their shares with a stop loss at 250. For new investors, he recommends a cautious approach, suggesting to wait for the stock to either break above 300 or to drop to around 265-260, which could present a 'bottom fishing opportunity'.
Fundraising Plans and Growth Prospects
IREDA is gearing up for its next leg of growth with a big-bang fundraising plan. The company is set to hold a meeting on August 29, 2024, to consider a proposal to raise 45 billion through a Follow-on Public Offer (FPO) or another mode. This fundraising is expected to support IREDA's loan growth and help the company achieve 1 trillion in advances by March 2025.
The company's comprehensive borrowing plan aims to mobilize 242 billion through various financial instruments. This ambitious plan is seen as a positive sign for India's renewable energy sector, which is expected to experience explosive growth in the coming years.
Market Sentiment and Technical Analysis
Despite the recent rally, some analysts have expressed caution. Technical Analyst Rajesh Satpute warned that if IREDA shares fall below 230, they could drop to around 200 or even as low as 190. However, if the stock recovers, he suggests considering an exit around the 250-260 range.
The Relative Strength Index (RSI) of IREDA, which had been in the 'Overbought' zone, has now slipped below 70, indicating a potential correction. However, ICICI Direct has retained a 'Buy' rating on IREDA with a price target of 330, reflecting ongoing optimism in the stock.
IREDA's strong performance and growth plans are aligned with India's ambitious renewable energy goals, making it a compelling investment play in the clean energy sector.
