IREDA - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.8
| Stock Code | IREDA | Market Cap | 37,026 Cr. | Current Price | 132 ₹ | High / Low | 196 ₹ |
| Stock P/E | 19.7 | Book Value | 46.0 ₹ | Dividend Yield | 0.00 % | ROCE | 9.37 % |
| ROE | 18.0 % | Face Value | 10.0 ₹ | DMA 50 | 137 ₹ | DMA 200 | 151 ₹ |
| Chg in FII Hold | 0.15 % | Chg in DII Hold | -0.06 % | PAT Qtr | 585 Cr. | PAT Prev Qtr | 549 Cr. |
| RSI | 46.5 | MACD | -2.45 | Volume | 74,89,311 | Avg Vol 1Wk | 95,34,446 |
| Low price | 124 ₹ | High price | 196 ₹ | PEG Ratio | 0.51 | Debt to equity | 5.41 |
| 52w Index | 10.6 % | Qtr Profit Var | 37.5 % | EPS | 6.78 ₹ | Industry PE | 19.7 |
📊 IREDA shows moderate potential for long-term investment. ROE at 18.0% reflects healthy profitability, though ROCE at 9.37% is modest. Debt-to-equity at 5.41 is high, indicating leveraged operations typical of financing companies. The PEG ratio of 0.51 suggests undervaluation relative to growth, while P/E of 19.7 is in line with the industry average of 19.7, offering fair valuation. Dividend yield is 0%, providing no income support. Current price (132 ₹) is below DMA 50 (137 ₹) and DMA 200 (151 ₹), showing weak momentum, with RSI at 46.5 pointing to near oversold conditions. Quarterly PAT growth of 37.5% is encouraging, supporting earnings visibility.
💡 Ideal Entry Zone: 125 ₹ – 135 ₹ (aligned with support levels and oversold RSI).
📈 Exit / Holding Strategy: If already holding, maintain for 2–3 years provided ROE sustains above 15% and earnings growth continues. Consider partial profit booking near 180–190 ₹ resistance. Long-term holding should be cautious given high leverage and modest ROCE.
Positive
- 📌 ROE at 18.0% reflects strong profitability.
- 📌 PEG ratio of 0.51 indicates undervaluation relative to growth.
- 📌 EPS at 6.78 ₹ supports earnings visibility.
- 📌 Quarterly PAT growth of 37.5% (549 Cr. to 585 Cr.).
- 📌 Slight increase in FII holdings (+0.15%).
Limitation
- ⚠️ ROCE at 9.37% is modest compared to ROE.
- ⚠️ Debt-to-equity ratio of 5.41 is high.
- ⚠️ Dividend yield at 0% offers no income support.
- ⚠️ Current price below DMA 50 and DMA 200 shows weak momentum.
Company Negative News
- ❌ Decline in DII holdings (-0.06%).
- ❌ Weak technical indicators (MACD -2.45, price below DMA levels).
Company Positive News
- ✅ Quarterly PAT improved to 585 Cr. from 549 Cr.
- ✅ FII holdings increased (+0.15%), showing foreign investor confidence.
- ✅ PEG ratio highlights growth potential at fair valuation.
Industry
- ⚡ Industry PE at 19.7 vs stock PE 19.7 shows fair valuation alignment.
- ⚡ Renewable energy financing sector benefits from government initiatives and rising demand for clean energy projects.
Conclusion
🔎 IREDA offers decent ROE and undervaluation on PEG, but high leverage and modest ROCE limit long-term attractiveness. Best suited for cautious investors who can accumulate near 125–135 ₹ and hold for 2–3 years, while monitoring profitability trends. Profit booking near 180–190 ₹ resistance is advisable.