Akash Jha
The Indian Renewable Energy Development Agency (IREDA), a government-owned enterprise, has submitted a draft red herring prospectus (DRHP) to Sebi, India’s securities regulator, in order to conduct an initial public offering and acquire capital. Since the Life Insurance Corporation went public in May of last year, this is the first IPO by a government-owned company.
A total of 67.19 billion equity shares would be offered to the public, consisting of 40.31 billion issued by the corporation and 26.88 billion offered for sale by the Government of India.
The net proceeds from the new issue will be put toward increasing the capital base so that it may better service future capital needs and provide for more lending.
As of June 2023, the capital adequacy ratios of the non-deposit-taking non-banking finance company were 17.17% (Tier-1 capital), 2.78% (Tier-2 capital), and 19.95% (CRAR). The ratio of capital to risk-weighted assets is known as the CRAR.
IREDA, as a certified infrastructure finance firm, supports the development of clean energy by providing funding for EEC and RE initiatives.
Its outstanding term loans increased at a CAGR of 30% between FY21 and FY23, reaching Rs 47,075.5 crore by the end of the June quarter of FY24.
The net profit of Rs 864.63 crore for the year ending in March FY23 climbed at a CAGR of 58% between FY21 and FY23, while it was just Rs 294.6 crore in Q1FY24.
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The net interest margin fell from 3.75 percent to 3.32 percent in fiscal year 23, and from there to 0.83 percent in the quarter ended June of fiscal year 24. Despite this, net interest income increased by 17.4 percent year over year to Rs 1,323.8 crore in fiscal year 23, and was at Rs 383 crore in Q1FY24.
The proportion of gross nonperforming assets to total term loans has decreased from 3.21 percent in March FY23 to 3.08 percent in June FY24, while the proportion of net NPA has decreased from 1.66 percent to 1.61 percent over the same time period.
There was an increase in the provision coverage ratio from 41.45% in FY22 to 49.55% in FY23, and it stood at 48.68% at the conclusion of the second quarter of FY24.
Three merchant banks, IDBI Capital Markets & Securities, BOB Capital Markets, and SBI Capital Markets, are handling the offering.
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