IREDA - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Analysis: Indian Renewable Energy Development Agency Ltd. (IREDA)

Investment Rating: 3.5

🔍 Fundamental Overview

ROE: 18.0% and ROCE: 9.37% — decent capital efficiency, suggesting average profitability for a financing institution.

EPS: ₹6.32 — moderate earnings strength.

Debt-to-Equity: 6.31 — extremely high leverage, which is typical in financing companies but worth monitoring for risk exposure.

Dividend Yield: 0.00% — no payout currently; focus remains on reinvestment or debt servicing.

Quarterly PAT decline (−35.7%) — potentially a red flag unless due to seasonal or one-time impacts.

PEG ratio is missing, which limits a full valuation analysis based on growth expectations, but the stock’s P/E is fairly aligned with Industry P/E (24.9 vs. 24.6) — implying it’s currently trading near fair value.

📉 Technical & Price Action

RSI: 27.2 — nearing oversold zone; may attract value hunters or signal price stabilization.

MACD: -4.32 — confirms bearish momentum, short-term weakness.

Trading below DMA 50 & DMA 200 — indicates correction phase; momentum reversal not yet visible.

Volume above 1-week average — suggests active selling or bargain accumulation.

🎯 Ideal Entry Zone: ₹140 – ₹150 This bracket offers a reasonable margin of safety near historical support and aligns with technical weakness zones.

🧭 Holding / Exit Strategy

✅ Suggested Holding Period: 2–4 years (if invested)

IREDA is a thematic play on India’s green finance sector and renewable infrastructure push.

Hold If

ROE improves to 20%+

EPS trends toward ₹8 in next 4–6 quarters

Debt metrics stabilize or show gradual reduction

PAT returns to ₹400 Cr+ consistently

🚪 Exit Strategy

Partial Exit: Near ₹220–₹240 if price rallies with weak volume or EPS stagnates

Full Exit If

ROE falls below 14% consistently

EPS growth stalls, or PAT remains volatile below ₹250 Cr

FII/DII momentum weakens after sustained accumulation

Leverage or NPA issues emerge that impact credit ratings

IREDA isn’t your classic compounding story—it’s more of a strategic macro and sectoral exposure bet. If India’s renewable energy financing expands and government incentives stay strong, IREDA could surprise.

Would you like to model its future PAT trajectory or compare with REC Ltd and PFC to assess portfolio fit? I can help craft a clean energy financing basket that matches your style ⚡📐

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