IREDA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.7
| Stock Code | IREDA | Market Cap | 37,953 Cr. | Current Price | 135 ₹ | High / Low | 187 ₹ |
| Stock P/E | 20.2 | Book Value | 46.0 ₹ | Dividend Yield | 0.44 % | ROCE | 9.37 % |
| ROE | 18.0 % | Face Value | 10.0 ₹ | DMA 50 | 127 ₹ | DMA 200 | 139 ₹ |
| Chg in FII Hold | 0.07 % | Chg in DII Hold | -0.07 % | PAT Qtr | 585 Cr. | PAT Prev Qtr | 549 Cr. |
| RSI | 60.3 | MACD | 4.85 | Volume | 63,25,444 | Avg Vol 1Wk | 86,94,906 |
| Low price | 109 ₹ | High price | 187 ₹ | PEG Ratio | 0.52 | Debt to equity | 5.41 |
| 52w Index | 33.9 % | Qtr Profit Var | 37.5 % | EPS | 6.78 ₹ | Industry PE | 19.8 |
Core Financials:
IREDA shows moderate fundamentals. ROE is strong at 18.0%, but ROCE is weak at 9.37%, reflecting efficiency concerns. EPS at ₹6.78 is modest, supported by quarterly PAT growth (₹585 Cr vs ₹549 Cr, +37.5%). Debt-to-equity is high at 5.41, indicating significant leverage risk.
Valuation:
Stock P/E of 20.2 is in line with industry average (19.8), suggesting fair valuation. PEG ratio of 0.52 indicates undervaluation relative to growth. Price-to-book is ~2.93, moderately expensive. Dividend yield of 0.44% provides minimal income support.
Business Model & Health:
IREDA operates as a renewable energy financing company, benefiting from government support and sector expansion. Competitive advantage lies in its niche focus and policy backing. However, high leverage and weak ROCE limit overall efficiency.
Entry Zone:
Ideal entry zone: ₹125–₹130. Current price ₹135 is slightly above fair entry. Long-term holding is viable with government support, but efficiency and leverage risks must be monitored.
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Positive
- Strong ROE (18.0%)
- PEG ratio (0.52) indicates undervaluation relative to growth
- Quarterly PAT growth (+37.5%)
- FII (+0.07%) holdings increased
- Technicals show bullishness: RSI 60.3, MACD 4.85
Limitation
- Weak ROCE (9.37%)
- High debt-to-equity (5.41)
- EPS modest at ₹6.78
- Dividend yield minimal (0.44%)
- DII holdings reduced (-0.07%)
Company Negative News
- Efficiency metrics remain weak despite profit growth
- High leverage limits flexibility
Company Positive News
- Quarterly PAT growth (₹585 Cr vs ₹549 Cr)
- FII confidence improved (+0.07%)
- Technical indicators show bullish momentum
Industry
Renewable energy financing sector trades at industry P/E of 19.8, supported by government initiatives and clean energy demand. IREDA trades near fair value but lags peers in efficiency due to high leverage.
Conclusion
IREDA offers moderate fundamentals with government backing and growth potential but weak efficiency and high leverage. Rating: 3.7. Entry near ₹125–₹130 is preferable. Long-term holding is viable with a 3–5 year horizon, contingent on ROCE improvement. Exit strategy around ₹175–₹185 if fundamentals stagnate.
Would you like me to also prepare a renewable energy sector overlay HTML table comparing IREDA with NTPC Green and PFC, so you can benchmark valuation, ROE, and leverage side by side?