IREDA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

🧠 My Thought Process

You're asking for a full-spectrum fundamental analysis of IREDA (Indian Renewable Energy Development Agency Ltd), with a numeric rating and strategic investment guidance. I’ve weighed profitability, capital efficiency, valuation, and business durability, and factored in recent performance trends, debt structure, and institutional sentiment as of September 2025.

📊 Fundamental Analysis of IREDA

🔍 Core Financials

Profitability

PAT Qtr: ₹247 Cr vs ₹502 Cr — sharp sequential decline, but YoY growth remains strong.

EPS: ₹5.77 — decent, though not high-growth.

ROE: 18.0%, ROCE: 9.37% — solid returns for a government-backed green finance NBFC.

Leverage & Liquidity

Debt-to-equity: 6.31 — high, typical for infra-financing firms; manageable due to sovereign backing and long-term asset base.

Dividend Yield: 0.00% — reinvestment-focused, no payouts yet.

Cash Flow & Stability

Strong institutional interest: DII holdings ↑2.44%, FII ↑0.30%.

Raised ₹453 Cr via perpetual bonds at 7.7% to strengthen capital base

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Book value: ₹38.2 vs current price of ₹156 — P/B ratio ~4.1, indicating premium valuation.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 28.0 Slightly overvalued vs industry PE of 25.3

P/B Ratio ~4.1 High — reflects optimism on growth

PEG Ratio 0.72 Attractive — growth justifies valuation

Intrinsic Value ~₹140–₹150 Slightly below current price — limited upside

🌱 Business Model & Competitive Edge

Segment Focus: Financing renewable energy projects — solar, wind, hydro, and bioenergy.

Moat: Government-owned, strategic role in India’s green energy transition, and access to low-cost capital.

Growth Drivers

National target of 500 GW renewable capacity by 2030.

35.9% quarterly revenue growth and 68% profit margin reported

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Perpetual bond issuance boosts lending capacity for green infra

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📈 Technical & Entry Guidance

Current Price: ₹156

DMA 50/200: ₹151 / ₹167 — trading below long-term average, indicating consolidation.

RSI: 66.8 — nearing overbought zone.

MACD: 1.04 — mild bullish momentum.

🎯 Entry Zone

Ideal Buy Range: ₹145–₹150 — near intrinsic value and DMA support.

Stop Loss: ₹138

Target: ₹175–₹185 in medium term

🕰️ Long-Term Holding Outlook

Hold if invested: Strong fundamentals, policy tailwinds, and green finance focus support long-term value.

Buy on dips: Preferably near ₹148 zone.

Growth Triggers: Renewable energy capex, sovereign support, and ESG fund inflows.

⭐ Fundamental Rating

4.2

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