Incorporated in 1987, IREDA is a systemically important non-deposit-taking non-banking finance company (NBFC-ND-SI) with an Infrastructure Finance Company (IFC) status. It is wholly-owned by the Government of India (GoI) under the administrative control of the Ministry of New and Renewable Energy (MNRE).
It provides financial assistance to RE (new and renewable energy) projects and EEC (energy efficiency and conservation) projects. It offers long-term, medium-term and short-term loans, top-up loans, bridge loans, takeover financing, and loans against securitization of future cash flows. Additionally, the bank provides loans to government entities; financing schemes for RE suppliers, manufacturers and contractors; and consulting services on techno-commercial issues relating to the RE sector.
It sources the funding from paid-up equity share capital accounting for ₹ 2,284 crore and borrowings of various maturities from the domestic and international markets.
It caters to multiple segments within the renewable energy industry, such as solar power, wind power, hydropower, transmission, biomass, including bagasse and industrial co-generation, waste-to-energy, ethanol, compressed biogas, hybrid RE, EEC and green-mobility.
In FY23, the bank sanctioned loans amassing a total of ₹ 32,586 crore and 93% of its term loans outstanding, as of 30 September 2023 have security cover.
As of 30 September 2023, the bank had term loans outstanding in 23 states and five union territories. It also operates a 50 MW Solar Photovoltaic Project in Kerala for the Kerala State Electricity Board.
Between FY21 and FY23, it saw a CAGR rise of 9% in its revenue from operations and 35% in its profit. Moreover, the NBFC has played a major role in developing the renewable energy sector in India. This, along with the fact that the government increased focus on expanding renewable capacity to 66% of total power requirement by FY32, could be beneficial for the company.
And now, Indian Renewable Energy Development Agency Limited is coming out with its initial public offer (IPO). The IPO will be an offer for sale as well as a fresh issue. The money raised through the fresh issue will be utilised to undertake existing business activities and to undertake the activities proposed to be funded from the net proceeds. Its shares will be listed on the NSE and the BSE.
Key Highlights
- A Systemically Important Non-Deposit-taking Non-Banking Finance Company (NBFC-ND-SI) with the status of an Infrastructure Finance Company (IFC).
- Wholly owned by the Government of India (GoI) under the administrative control of the Ministry of New and Renewable Energy (MNRE).
- Provides financial assistance to RE (new and renewable energy) projects and EEC (energy efficiency and conservation) projects.
- Offers long-term, medium-term and short-term loans, top-up loans, bridge loans, takeover financing, and loans against securitization of future cash flows.
- Sources the funding from paid-up equity share capital and borrowings of various maturities from the domestic and international markets.
- Caters to multiple RE sectors such as solar power, wind power, hydro power, transmission, biomass, waste-to-energy, ethanol, compressed biogas, hybrid RE, EEC and green-mobility.
- CAGR rise of 9% in its revenue from operations and 35% in its profit between FY21 and FY23.
- Had term loans outstanding in 23 States and five Union Territories as of 30 September 2023.
- Sanctioned loans amassed to a total of ₹ 32,586 crore in FY23.
Strengths
- Largest pure-play green financing NBFC in India as of 31 March 2023.
- Track record of growth along with diversification of its asset base. As of 31 March 2023, term loans outstanding stood at ₹47,075 crore, which rose at a CAGR of 30% in the last three fiscal years.
- Access to diversified and cost-effective long-term source of borrowings as its average cost of borrowing for FY23 was 6.23%.
- Strategic role in GoI initiatives as it serves as the implementing agency for key MNRE policies and schemes and acts as the Central Nodal Agency for specific schemes.
- Company has an established and trusted brand name with an experience of 36 years.
Risks and threats
- Subjected to risks associated with volatility in interest rates.
- Dependent on the Indian renewable energy sector for its business growth, which, in general, has many challenges.
- India Ratings downgraded the company’s bonds to “IND AA+’/Stable” from “AAA/Negative in September 2020. Any further ratings downgrade could impact future business.
- RE projects tend to be intermittent, seasonal, prone to vagaries of nature and have inherent risks such as political, regulatory, fiscal, monetary, legal and others.
- Subject to periodic inspections by the RBI.
- Has experienced negative cash flows from operating and investing activities in FY21, FY22 and FY23.
- As of 30 September 2023, its indebtedness aggregated to ₹39,850 crore. High indebtedness could adversely impact a company’s business and financial performance.
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