IREDA Files DRHP for IPO, First by PSU After LIC
State-owned Indian Renewable Energy Development Agency (IREDA) has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) to raise funds via an initial public offering (IPO). The IPO is the first by a public sector enterprise after Life Insurance Corporation’s public issue in May last year.
The public issue of 67.19 crore equity shares will comprise a fresh issue of 40.31 crore equity shares by the company and an offer-for-sale of 26.88 crore shares by the Government of India. The net proceeds from the fresh issue will be used to augment the capital base of IREDA to meet future capital requirements and onward lending.
IREDA is a non-deposit-taking non-banking finance company with a capital adequacy ratio of 17.17 percent (Tier-1 capital), 2.78 percent (Tier-2 capital) and 19.95 percent (CRAR) as of June 2023. CRAR is capital to risk (weighted) assets ratio.
IREDA provides financial assistance for new and renewable energy (RE) projects and energy efficiency and conservation (EEC) projects. As of June 2023, its outstanding term loans grew at a CAGR of 30 percent during FY21-FY23 to Rs 47,075.5 crore and stood at Rs 47,206.66 crore at the end of the June quarter of FY24.
The company’s net profit for the year ended March FY23 at Rs 864.63 crore increased at a CAGR of 58 percent during FY21-FY23, while it was at Rs 294.6 crore in Q1FY24. Net interest income grew by 17.4 percent on-year to Rs 1,323.8 crore in FY23, and was at Rs 383 crore in Q1FY24. However, the net interest margin declined to 3.32 percent in FY23, from 3.75 percent in the previous year, and stood at 0.83 percent in the quarter ended June FY24.
Gross non-performing assets as a percentage of term loans outstanding reduced from 3.21 percent as of March FY23 to 3.08 percent in June FY24 and net NPA dropped from 1.66 percent to 1.61 percent during the same period. The provision coverage ratio has also improved to 49.25 percent in FY23, from 41.45 percent in FY22, and was at 48.68 percent at the end of the June FY24 quarter.
IDBI Capital Markets & Securities, BOB Capital Markets, and SBI Capital Markets are the merchant bankers for the issue.
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