IREDA Q3FY25: Robust Loan Growth, Improved Asset Quality YoY, PAT Up 27%

Company Name: Indian Renewable Energy Development Agency Ltd |  NSE Code: IREDA |  BSE Code: 544026 |  52 Week high/low: 310 / 104| CMP: INR 201 |   Mcap: INR 54,078 Cr   |  P/BV – 5.81

About the stock

IREDA is PSU NBFC engaged in the business of financing green energy projects. Its finances project such as solar, wind power, hydro power etc. GoI has conferred the Navratna status upon IREDA in April 2024. Loan portfolio well diversified across the 23 states and 4 UT in FY24. It contributing major role in fueling the India’s RE taget of 500 GW by 20230.

Robust growth in loan book up 36% YoY /7% half yearly

As on 30 December 2024, loan book stood at 68,960 Cr represent growth of 36% YoY while half-yearly growth was moderate at 8%. This growth led by loan given to state utilities (68% YoY) followed by hydro power at 35%, solar 18% and wind at 3%.

Along with loan book disbursement and sanction grew 25% and 45% to stood at 7,449 Cr and 13,227 Cr respectively.

Asset quality improved YoY but dissapoint QoQ

During the Q3FY25, gross asset quality has improved by 22 bps YoY declined in GNPA stood at 2.68% While QoQ jump 49 bps during the quarter. NNPA down 2 bps YoY to 1.5% but jump 46 bps QoQ despite the surge in provision coverage ratio.

Borrowing jump 39% during the quarter – domestic rise while foreign declined

During H2FY25 company’s borrowing increased by 39% to stood at 57,931 Cr. Dometic borrowing raised 54% to 49,361 Cr while foreign borrowings declined 12%.

In domestic borrowing, bank loan weightage has declined to 45% in Q2FY25 vs 57% in Q3FY24. while money raised through bonds weightage rise to 55% in Q3FY25 vs 43% in Q3FY24. The rising chance of rate cuts will declined the borrowing cost for company as bank loan and bond both equally weight in borrowing.

Within the foreign borrowing, un-hedged portion rise to 26% in Q3FY25 vs 21% in Q3FY24. While hedged portion has declined equally to increased in un-hedged. The surge in un-hedged portion increased the currency risk.

Valuation and key metrics

currently stock is trading at 5.79x its book value while the industry median P/B stood at 2.41x. During the quarter, Yield on loan jump 9 bps to 9.96% while Cost of borrowing decline by 15 bps to 7.68%. This result in surge in spread and NIMs by 23 bps and 13 bps to stood at 2.28% and 3.33% respectively. The cost of borrowinf can further decline in coming quarter as RBI ready to ease monetary policy. Capital Adequacy ratio stood at 19.63% which is above the guidance of RBI but decline by 425 bps YoY.

Q3FY25 Results updates

Interest income increased by 37% YoY (5% QoQ) to 1,654 Cr while interest expense jumped 36% YoY (0% QoQ) to 1,032 Cr. This result in NII grew by 39% YoY (14% QoQ) to 622 Cr. The surge in NII led by Nims expansion and increased in new loan book.

PPOP grew 52% YoY (30% QoQ) to 642 Cr due to lower Opex (down 65% YoY). While PAT surged by 27% YoY and 10% on QoQ basis to stood at 425 Cr.The PAT lowered due to higher growth in provision and tax expenses. 

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