IREDA files DRHP with SEBI to raise funds via IPO

12 Sep 2023 , 11:25 AM

The Indian Renewable Energy Development Agency (IREDA), a government-owned entity, has submitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) for the purpose of raising funds through an initial public offering (IPO). This marks the first IPO from a public sector enterprise since the public offering by Life Insurance Corporation in May of the previous year.

The IPO will consist of a total of 67.19 crore equity shares, comprising a fresh issue of 40.31 crore equity shares by the company and a government offer-for-sale of 26.88 crore shares. The net proceeds from the fresh issue will primarily be used to bolster the company’s capital base, addressing future capital requirements and facilitating further lending activities.

IREDA, classified as a non-deposit-taking non-banking finance company, boasted a capital adequacy ratio of 17.17 percent for Tier-1 capital, 2.78 percent for Tier-2 capital, and 19.95 percent for CRAR (Capital to Risk-Weighted Assets Ratio) as of June 2023. The agency, recognized as an infrastructure finance company, extends financial support to both new and renewable energy (RE) projects as well as energy efficiency and conservation (EEC) projects.

By June 2023, the outstanding term loans had experienced a compounded annual growth rate (CAGR) of 30 percent during the period from FY21 to FY23, reaching Rs 47,075.5 crore, and subsequently standing at Rs 47,206.66 crore at the close of the June quarter of FY24.

In terms of financial performance, the net profit for the fiscal year ending in March FY23 amounted to Rs 864.63 crore, with a CAGR increase of 58 percent from FY21 to FY23, in contrast to the Rs 294.6 crore reported in Q1FY24.

Moreover, the gross non-performing assets (NPAs) as a percentage of outstanding term loans decreased from 3.21 percent as of March FY23 to 3.08 percent by June FY24, and the net NPA ratio decreased from 1.66 percent to 1.61 percent during the same period. The provision coverage ratio also exhibited improvement, reaching 49.25 percent in FY23, up from 41.45 percent in FY22, and standing at 48.68 percent at the close of the June FY24 quarter.

The merchant bankers managing the IPO for IREDA are IDBI Capital Markets & Securities, BOB Capital Markets, and SBI Capital Markets.