Any views on Indian Renewable Energy Development Agency IPO?? I personally feel it is a good IPO for 30-32 band range and is a promising stock for long term holding. Is anyone having better details regarding this IPO and company??
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Indian Renewable Energy Development Agency IPO
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Praveen05
TF Select
IREDA IPO Details - IPO Date, Price, GMP, Analysis & Review
Get IREDA IPO details. Find IPO Date, Price, Live Subscription, Allotment, Grey Market Premium GMP, Listing Date, Analysis and Review.
www.chittorgarh.com
IREDA IPO Date, Review, Price, Allotment Details
IREDA IPO date is coming soon. Check IREDA IPO review, price, lot size, form, financial results, valuations & IPO allotment status.
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For all IPO related information, you can use these websites.
CARDBITRAGE
TF Ace
I haven't researched the stock, as I stay away from PSUs for long-term investing. But here are a few things to note:
1. It is a PSU stock. Hence the cheap valuations.
2. The projects related to Green energy have certain inherent risks.
3. The whole business is concentrated only on the Indian renewable energy space, so it is directly proportional to the growth in this space.
4. DISCOMs have an abysmal track record when it comes to payments, so that may stress the cash flow of their business as their borrowers may face repayment issues.
1. It is a PSU stock. Hence the cheap valuations.
2. The projects related to Green energy have certain inherent risks.
3. The whole business is concentrated only on the Indian renewable energy space, so it is directly proportional to the growth in this space.
4. DISCOMs have an abysmal track record when it comes to payments, so that may stress the cash flow of their business as their borrowers may face repayment issues.
I have not applied as PSU stocks don't show stellar returns or climb very fast in short term. But I will wait and watch as it is in a interesting space with growth potential. Rather I have bid for Tata Technologies...
Allotment milega kya?
Don't know. Linkin time is not displaying Tata tech allocation status. Error in BSE website. Is allocation complete? I thought it would be tonight and will get mail tomorrow
I was just being cynical
pratyushpanda
TF Premier
#copied from reddit but have a read
Why I think IREDA will be a multi-bagger with 300% potential
I think IREDA is a Multi-bagger stock that can grow by 300-400% in around 1-2years. Here are my reasons.
This is **not** a copy-paste, but entirely my own research. Source of most of the company data is Red Herring Prospectus available [here](https://www.sebi.gov.in/filings/public-issues/nov-2023/indian-renewable-energy-development-agency-limited-rhp_79087.html) but other relvent info is my personal research and understanding of the industry.
This is shared for educational purposes. Both mine and yours. I had no plans to write this, but when I researched and wrote points for my own investment, it become detailed enough that I thought of putting slightly more effort and making it into an article.
# Business model
​
* IREDA is a central govt company made in 1987 to specifically give loans to renewable energy projects in India.
* Currently, it is the largest renewable energy financing company in India and have given out loans nearing 50000crores.
* IREDA's business is quite simple to understand yet many do not understand. They basically takes loans at 6.23% interest and then use that money to give loans to big renewable energy projects at average interest of around 10%, thus profiting 4% of everything they borrow!
* It is beneficial for companies that take these loans too as 10% is still a much lower interest rate than many other business loans from other sources. Thus win-win.
* People see the large debt and is wary of investing in a company with debt, that maybe true for normal companies but not for finance companies. Here they are all very good debt and this is exactly how all financial companies make money. More debt means more money to lend, and make more money.
* Their borrowing rate is the lowest among their peers. They borrow about half from domestic sources like RBI and bonds and the other half from foreign green investors including Japan International Cooperation Agency, KfW, Asian Development Bank, Agence Française de Développement and the World Bank.
* The average cost of borrowing of IREDA is 6.23% in 2023. Other financing companies like REC limited have 6.96% and Power Finance Corporation Limited have 7.1% interest for the loans they borrow. Being able to borrow for such low rates, even less than Fixed-Deposits is the biggest advantage for a finance company.
​
[The largest solar farm in the world is in Bhadla, Rajasthan. Funded partially by IREDA.](https://preview.redd.it/pwdvmma8du2c1.jpg?width=1136&format=pjpg&auto=webp&s=77081e01ee6c8926e88749087d3e9d9446694cb8)
# Why Low risk
#
* Their main customers are large solar power plants and wind mills. More than 46% of their customers have made a legal agreement with the government(PPA) for the price at which govt will buy electricity from them. This is a permanent agreement that cannot be altered. This agreement was done to encourage renewable energy investments in India.
* So, a company that started in 2014 may have an agreement to sell electricity at a higher rate than a company that started in 2019 because cost of investment was higher in 2014.
* This basically guarantees profits no matter which year a renewable energy company was started as this fixed price means these solar/wind companies are guaranteed to get revenue from govt and thus guaranteed to pay their loans. There have been couple of instances of state govts wanting to get out of this agreement like in Andra Pradesh, but the govt eventually lost the case in court.
* The Andhra Pradesh high court gave order in 2022 that power contracts cannot be renegotiated and asked the state to clear dues estimated at Rs 30,000 crore to renewable energy generators in six weeks.
* But apart from that 93.4% of the loans are secured with collateral, so if the company is unable to pay in the worst case, IREDA can liquidate their collateral to recover money.
* 99.6% of the loan taking customers have taken compulsory insurance against natural disasters like Earthquake, flood, cyclone etc. So, there is no risk from disasters.
* 94.3% of the loans are given on floating interest rate, meaning the interest-payment is linked to inflation, thus there is no inflation risk to IREDA.
* 20 biggest customers account for 40% of the total loans given.
* IREDA has given loans in 23 states, so the political risk is spread across India.
* Only 1.66% of the loans given have turned out to be Non performing assets(NPAs). The net NPAs exhibited improvement, decreasing from 3.12% to 1.66% in FY23
* Out of this 1.6%, more than 70% were the loans given to Biomass plants and hydro plants, both of which were a learning experience for the company. The solar and wind are the main areas of expected growth in next 6 years, so I think NPA percentage will further come down.
​
​
# Why high value
#
* Generally, Govt PSUs are huge companies in the 50k+ range market cap. But this one is a 8k market cap company. It is basically a government startup that is in a highly lucrative field that is about to blow up.
* Government companies are generally inefficient at doing complicated projects. Like HAL has to make fighterjets. Mazagon have to make ships. All of them are too complicated, and easy for govt company to messup. But here it is a simple business model with low number of employees required.
* They just have 175 employees, but with an average experience of 18years! Basically like a startup, but focused on one thing only.
* Government companies that has too many customers are also generally inefficient like Air India, Railways or BSNL. But, here they have one of the lowest number of customers. Thus it is easy for a govt company to manage and give good service.
* Govt is currently looking to monetize its companies and earn dividends every year. So, new guidelines says all central public sector enterprise are required to pay a minimum annual dividend of 30% of profit after tax or 5% of the net worth. IREDA is a profit making company for a long time. Thus, it will give good dividend in future too.
* Govt companies generally lists showing their actual value, and is not incentivized to list at blown up valuations. Here the net worth of the company is 6,580 crore. And the market cap is 8600 crore at Rs32 per share. Considering stock market is forward looking, there is huge scope for growth.
* India has committed to make 500GW of renewable energy by 2030. That is MASSIVE. India's total energy consumption from all sources currently is for example 190GW.
* India's installed solar energy capacity has increased by 30 times in the last 9 years and stands at 70.10 GW as of July 2023
* IREDA was the financier of 22GW of renewable energy in India as of now including partially financing the largest solar power plant in the world.
* Prime minister Modi had infused 1500 crore just last year into IREDA to fast up the growth of renewable energy. This shows clear govt support for this company. But anyway my point is that 1500 crore out of 6500 crore networth of the company is direct funds from last year given for free by govt.
* Even after this IPO, 75% of the stock will still be owned by the central government, thus they are committed in the growth of this company.
* IREDA also fully owns a 50MW solar power plant in Kerala that generates 28crore per year revenue.
​
# The current timing is awesome
​
* 58000 crore worth of money was used to apply for IREDA IPO of just 2150 crore. Last week saw the biggest IPOs of this year. 5 IPOs that came in the week totaling 2.6lakh crore, total of 2.6lakh crore were invested. This is largest amount ever invested in a week in Indian history.
* Among these 5 stocks, IREDA will be the first to get listed, and there is gap for others to be listed.
* More than 2.5lakh crore of this locked-up capital will be unfrozen just before IREDA is listed.
* This can cause it to show unprecedented demand when all of these people who have not got any IPO will look at buying the first IPO that got listed.
* But it will take people some time to realize this value, and stocks are forward looking, so I think in around 1-2years people will realize the potential and the price will skyrocket.
* Two years ago a similar PSU company IRFC which lends money to Railways went for IPO. It was priced at 26 rupees. But got listed at a loss of 3.5%. Its share price increase to 90 when people realized its value.
* IRFC was only subscribed 3x by QIBs. This time IREDA is 104x subscription from QIBs. There is clear interests from banks, mutual funds and govt institutions for investing in IREDA with long term view.
* IRFC lends only to railways. The scope of IREDA is substantially bigger, and is at the right time when renewable has finally become viable.
* Currently there is a trend of PSUs generally skyrocketing few years after IPO. Look at what happened to Irfc, Rvnl, IRCTC and Mazgaon.
​
​
**IRCTC listed in 2019**
IPO price - ₹320
52 Weeks High - ₹758
Current price - ₹692
​
**RVNL listed in 2019.**
IPO price - ₹19
52w high - ₹199
Current price - ₹167
​
**Mazagon listed in 2020.**
IPO price - ₹145
52w high - ₹2500
Current price - ₹2039
​
**IRFC listed in 2021**
IPO price - ₹26
52 Weeks High- ₹92
Current price - ₹76
​
# Growth
IREDA has enough space to grow in the next 6 years. And even at 5x the IPO price, it will be a company under 50k crore market capitalization. Since stock market is forward looking, it is possible that big funds will also go long on this much before than the actual value of the company reaches there. And the size of the company is small enough for it to get influenced by the big funds.
​
Stock price at various Market capitalization visualization.
₹32 - 8.6k crore
₹64 - 17.2k crore
₹96 - 25.8k crore
₹128 - 34.4crore
₹169 - 43k crore
​
This is a highly scalable data-driven business with very low risk of lending. Like, you know exactly what a solar panel will cost, and how much money it will produce over the years, so you are unlikely to give bad loans. In other financing companies, the risk is high like if you give loans to an airline or for making an ebike manufacturing factory, or give out personal loans, data is not the same for each loan-taker even in same industry. So, it is possible one ebike company makes profit while other do not. But that is not the case with solar or wind energy.
In one way I am happy I am getting to buy this stock at undervalued prices, but I am also mad at the government for selling 25% stake in such a profit making good company for loot prices. They could have got full subscription even at double the price. So, why sell low?
In general, this looks like a very good stock for long term value investing. There are so many upsides but very little downsides. I am going for long in this one.
​
**Disclaimers** :
This is the first time I am posting about a stock on Reddit though I have made countless other detailed posts in past 5 years on Reddit. Like 4 years ago I made this viral post bout India's solar power achievements [Link](https://www.reddit.com/r/UpliftingNews/comments/d896ea/pm_modi_vows_to_more_than_double_indias_nonfossil/). I have been consistent proponent of renewable energy in India like in this [post](https://www.reddit.com/r/UpliftingNews/comments/d95iqw/india_installs_193_solar_panels_on_the_roof_of/). Go to my profile and sort by top to know more about my other high effort posts.
I have purchased IREDA stock in IPO in HNI quota. And intent to purchase more at market pre-open if the price is below 45. So my views maybe biased.
I am not SEBI registered adivsor. The information provided here is for educational purposes only. I will not be responsible for any of your profit/loss. Do your own research before investing.
Why I think IREDA will be a multi-bagger with 300% potential
I think IREDA is a Multi-bagger stock that can grow by 300-400% in around 1-2years. Here are my reasons.
This is **not** a copy-paste, but entirely my own research. Source of most of the company data is Red Herring Prospectus available [here](https://www.sebi.gov.in/filings/public-issues/nov-2023/indian-renewable-energy-development-agency-limited-rhp_79087.html) but other relvent info is my personal research and understanding of the industry.
This is shared for educational purposes. Both mine and yours. I had no plans to write this, but when I researched and wrote points for my own investment, it become detailed enough that I thought of putting slightly more effort and making it into an article.
# Business model
​
* IREDA is a central govt company made in 1987 to specifically give loans to renewable energy projects in India.
* Currently, it is the largest renewable energy financing company in India and have given out loans nearing 50000crores.
* IREDA's business is quite simple to understand yet many do not understand. They basically takes loans at 6.23% interest and then use that money to give loans to big renewable energy projects at average interest of around 10%, thus profiting 4% of everything they borrow!
* It is beneficial for companies that take these loans too as 10% is still a much lower interest rate than many other business loans from other sources. Thus win-win.
* People see the large debt and is wary of investing in a company with debt, that maybe true for normal companies but not for finance companies. Here they are all very good debt and this is exactly how all financial companies make money. More debt means more money to lend, and make more money.
* Their borrowing rate is the lowest among their peers. They borrow about half from domestic sources like RBI and bonds and the other half from foreign green investors including Japan International Cooperation Agency, KfW, Asian Development Bank, Agence Française de Développement and the World Bank.
* The average cost of borrowing of IREDA is 6.23% in 2023. Other financing companies like REC limited have 6.96% and Power Finance Corporation Limited have 7.1% interest for the loans they borrow. Being able to borrow for such low rates, even less than Fixed-Deposits is the biggest advantage for a finance company.
​
[The largest solar farm in the world is in Bhadla, Rajasthan. Funded partially by IREDA.](https://preview.redd.it/pwdvmma8du2c1.jpg?width=1136&format=pjpg&auto=webp&s=77081e01ee6c8926e88749087d3e9d9446694cb8)
# Why Low risk
#
* Their main customers are large solar power plants and wind mills. More than 46% of their customers have made a legal agreement with the government(PPA) for the price at which govt will buy electricity from them. This is a permanent agreement that cannot be altered. This agreement was done to encourage renewable energy investments in India.
* So, a company that started in 2014 may have an agreement to sell electricity at a higher rate than a company that started in 2019 because cost of investment was higher in 2014.
* This basically guarantees profits no matter which year a renewable energy company was started as this fixed price means these solar/wind companies are guaranteed to get revenue from govt and thus guaranteed to pay their loans. There have been couple of instances of state govts wanting to get out of this agreement like in Andra Pradesh, but the govt eventually lost the case in court.
* The Andhra Pradesh high court gave order in 2022 that power contracts cannot be renegotiated and asked the state to clear dues estimated at Rs 30,000 crore to renewable energy generators in six weeks.
* But apart from that 93.4% of the loans are secured with collateral, so if the company is unable to pay in the worst case, IREDA can liquidate their collateral to recover money.
* 99.6% of the loan taking customers have taken compulsory insurance against natural disasters like Earthquake, flood, cyclone etc. So, there is no risk from disasters.
* 94.3% of the loans are given on floating interest rate, meaning the interest-payment is linked to inflation, thus there is no inflation risk to IREDA.
* 20 biggest customers account for 40% of the total loans given.
* IREDA has given loans in 23 states, so the political risk is spread across India.
* Only 1.66% of the loans given have turned out to be Non performing assets(NPAs). The net NPAs exhibited improvement, decreasing from 3.12% to 1.66% in FY23
* Out of this 1.6%, more than 70% were the loans given to Biomass plants and hydro plants, both of which were a learning experience for the company. The solar and wind are the main areas of expected growth in next 6 years, so I think NPA percentage will further come down.
​
​
# Why high value
#
* Generally, Govt PSUs are huge companies in the 50k+ range market cap. But this one is a 8k market cap company. It is basically a government startup that is in a highly lucrative field that is about to blow up.
* Government companies are generally inefficient at doing complicated projects. Like HAL has to make fighterjets. Mazagon have to make ships. All of them are too complicated, and easy for govt company to messup. But here it is a simple business model with low number of employees required.
* They just have 175 employees, but with an average experience of 18years! Basically like a startup, but focused on one thing only.
* Government companies that has too many customers are also generally inefficient like Air India, Railways or BSNL. But, here they have one of the lowest number of customers. Thus it is easy for a govt company to manage and give good service.
* Govt is currently looking to monetize its companies and earn dividends every year. So, new guidelines says all central public sector enterprise are required to pay a minimum annual dividend of 30% of profit after tax or 5% of the net worth. IREDA is a profit making company for a long time. Thus, it will give good dividend in future too.
* Govt companies generally lists showing their actual value, and is not incentivized to list at blown up valuations. Here the net worth of the company is 6,580 crore. And the market cap is 8600 crore at Rs32 per share. Considering stock market is forward looking, there is huge scope for growth.
* India has committed to make 500GW of renewable energy by 2030. That is MASSIVE. India's total energy consumption from all sources currently is for example 190GW.
* India's installed solar energy capacity has increased by 30 times in the last 9 years and stands at 70.10 GW as of July 2023
* IREDA was the financier of 22GW of renewable energy in India as of now including partially financing the largest solar power plant in the world.
* Prime minister Modi had infused 1500 crore just last year into IREDA to fast up the growth of renewable energy. This shows clear govt support for this company. But anyway my point is that 1500 crore out of 6500 crore networth of the company is direct funds from last year given for free by govt.
* Even after this IPO, 75% of the stock will still be owned by the central government, thus they are committed in the growth of this company.
* IREDA also fully owns a 50MW solar power plant in Kerala that generates 28crore per year revenue.
​
# The current timing is awesome
​
* 58000 crore worth of money was used to apply for IREDA IPO of just 2150 crore. Last week saw the biggest IPOs of this year. 5 IPOs that came in the week totaling 2.6lakh crore, total of 2.6lakh crore were invested. This is largest amount ever invested in a week in Indian history.
* Among these 5 stocks, IREDA will be the first to get listed, and there is gap for others to be listed.
* More than 2.5lakh crore of this locked-up capital will be unfrozen just before IREDA is listed.
* This can cause it to show unprecedented demand when all of these people who have not got any IPO will look at buying the first IPO that got listed.
* But it will take people some time to realize this value, and stocks are forward looking, so I think in around 1-2years people will realize the potential and the price will skyrocket.
* Two years ago a similar PSU company IRFC which lends money to Railways went for IPO. It was priced at 26 rupees. But got listed at a loss of 3.5%. Its share price increase to 90 when people realized its value.
* IRFC was only subscribed 3x by QIBs. This time IREDA is 104x subscription from QIBs. There is clear interests from banks, mutual funds and govt institutions for investing in IREDA with long term view.
* IRFC lends only to railways. The scope of IREDA is substantially bigger, and is at the right time when renewable has finally become viable.
* Currently there is a trend of PSUs generally skyrocketing few years after IPO. Look at what happened to Irfc, Rvnl, IRCTC and Mazgaon.
​
​
**IRCTC listed in 2019**
IPO price - ₹320
52 Weeks High - ₹758
Current price - ₹692
​
**RVNL listed in 2019.**
IPO price - ₹19
52w high - ₹199
Current price - ₹167
​
**Mazagon listed in 2020.**
IPO price - ₹145
52w high - ₹2500
Current price - ₹2039
​
**IRFC listed in 2021**
IPO price - ₹26
52 Weeks High- ₹92
Current price - ₹76
​
# Growth
IREDA has enough space to grow in the next 6 years. And even at 5x the IPO price, it will be a company under 50k crore market capitalization. Since stock market is forward looking, it is possible that big funds will also go long on this much before than the actual value of the company reaches there. And the size of the company is small enough for it to get influenced by the big funds.
​
Stock price at various Market capitalization visualization.
₹32 - 8.6k crore
₹64 - 17.2k crore
₹96 - 25.8k crore
₹128 - 34.4crore
₹169 - 43k crore
​
This is a highly scalable data-driven business with very low risk of lending. Like, you know exactly what a solar panel will cost, and how much money it will produce over the years, so you are unlikely to give bad loans. In other financing companies, the risk is high like if you give loans to an airline or for making an ebike manufacturing factory, or give out personal loans, data is not the same for each loan-taker even in same industry. So, it is possible one ebike company makes profit while other do not. But that is not the case with solar or wind energy.
In one way I am happy I am getting to buy this stock at undervalued prices, but I am also mad at the government for selling 25% stake in such a profit making good company for loot prices. They could have got full subscription even at double the price. So, why sell low?
In general, this looks like a very good stock for long term value investing. There are so many upsides but very little downsides. I am going for long in this one.
​
**Disclaimers** :
This is the first time I am posting about a stock on Reddit though I have made countless other detailed posts in past 5 years on Reddit. Like 4 years ago I made this viral post bout India's solar power achievements [Link](https://www.reddit.com/r/UpliftingNews/comments/d896ea/pm_modi_vows_to_more_than_double_indias_nonfossil/). I have been consistent proponent of renewable energy in India like in this [post](https://www.reddit.com/r/UpliftingNews/comments/d95iqw/india_installs_193_solar_panels_on_the_roof_of/). Go to my profile and sort by top to know more about my other high effort posts.
I have purchased IREDA stock in IPO in HNI quota. And intent to purchase more at market pre-open if the price is below 45. So my views maybe biased.
I am not SEBI registered adivsor. The information provided here is for educational purposes only. I will not be responsible for any of your profit/loss. Do your own research before investing.
Wow. Thanks for the detailed information.
@xywowowvw dekho yeh bakchodi
aree copy paste wale bhai
i didnt read the whole part
but tell me this are these green projects being financed secured with collateral or are unsecured
i didnt read the whole part
but tell me this are these green projects being financed secured with collateral or are unsecured
pratyushpanda
TF Premier
93.4% of the loans are secured with collateral, so if the company is unable to pay in the worst case, IREDA can liquidate their collateral to recover money.
* 99.6% of the loan taking customers have taken compulsory insurance against natural disasters like Earthquake, flood, cyclone etc. So, there is no risk from disasters.
* 94.3% of the loans are given on floating interest rate, meaning the interest-payment is linked to inflation, thus there is no inflation risk to IREDA.
The collateral that is there what is it
Is it a liquid asset a fixed asset.
What would be the approx haircut on the same if it goes for liquidation
CARDBITRAGE
TF Ace
Mostly illiquid IMO. The land+solar project is the asset. If put under liquidation, they can recover like 60-80% of the market value of the project after depreciation. The worst part is that the price/unit of electricity generated(PPA) is fixed at a very nominal price for a long duration(up to 25 years) which is absolutely ridiculous.
Last edited:
Us senate said that the cost and damage to convert biofuel vehicles to electrical is high and much more polluting due to mining of lithium
So a bit skeptical on green finance or esg in that matter
So a bit skeptical on green finance or esg in that matter
CARDBITRAGE
TF Ace
Most green energy projects are not viable to operate at scale, either due to the cost or the unavailability of the REEs
@xywowowvw @CARDBITRAGE thoughts on IREDA listing
Akashn
TF Ace
Faad diya 🔥
