IREDA share price declined by 3.4 percent before the public sector energy major announced quarterly results. While IREDA declined to Rs 215.75 on Thursday, we can expect strong move in the stock in today's session. As per technical charts, IREDA has strong support at Rs 210. The Indian Renewable Energy Development Agency (IREDA) has posted an impressive 26.8% year-on-year growth in its net profit for the third quarter, reaching Rs 425.4 crore compared to Rs 335.5 crore in the same period last year. The company also reported a robust 39% surge in net interest income (NII), driven by strong operational performance and growing renewable energy disbursements, which rose by 41% YoY to Rs 17,236 crore. Meanwhile, the board’s decision to raise Rs 4,500 crore through a QIP or FPO remains a focal point.

IREDA Q3 Financial Performance

Net Profit Growth
IREDA’s net profit surged 26.8% YoY in the December quarter, reaching Rs 425.4 crore, a significant rise from Rs 335.5 crore reported in Q3 FY23. This growth highlights the company’s efficient cost management and expanding revenue streams in the renewable energy sector.

Net Interest Income Soars
The company’s net interest income rose by 39% YoY to Rs 622.3 crore, compared to Rs 448.1 crore in the same quarter last year. This performance was driven by higher loan disbursements and robust interest income generation.

Loan Disbursements Reflect Renewed Momentum

41% Increase in Disbursements
IREDA’s loan disbursements for Q3 FY24 stood at Rs 17,236 crore, marking a 41% YoY growth compared to Rs 12,220 crore in the same period last year. This uptick underscores the company’s critical role in financing India’s renewable energy transition, backed by strong project demand and execution.

Stock Performance Ahead of Earnings Announcement

Stock Declines Despite Positive Results
Ahead of its earnings release, shares of IREDA declined 3.4%, closing at Rs 215.15 on Thursday. This marked a break in the stock's two-day gaining streak, suggesting cautious investor sentiment ahead of key announcements.

IREDA’s Fundraising Plan: Rs 4,500 Crore Through QIP/FPO

Board Approval for Capital Raising
IREDA’s board has approved a plan to raise Rs 4,500 crore through a Qualified Institutional Placement (QIP) or Follow-on Public Offer (FPO). This initiative is aimed at supporting the company’s growth ambitions in renewable energy financing.

Government Shareholding Dilution
The alternative mechanism has authorized a dilution of up to 7% of the government’s shareholding in IREDA. The funds raised through the QIP will involve the issuance of fresh equity, which was approved by the Department of Investment and Public Asset Management (DIPAM) in September 2024.

Strategic Implications for IREDA

Strengthening Market Position
The capital infusion through the proposed QIP/FPO will enable IREDA to strengthen its balance sheet and expand its lending capacity, thereby solidifying its position as a leading financier in India’s renewable energy landscape.

Focus on Renewable Energy Transition
With robust financial performance and strategic fundraising plans, IREDA is poised to play a pivotal role in supporting India’s ambitious renewable energy targets, aligning with the government’s green energy vision.

Actionable Insights for Investors

Short-Term View: Investors should monitor the stock’s performance in the coming sessions, particularly in light of fundraising developments and the potential dilution of government shareholding.
Medium-Term Potential: IREDA’s robust loan disbursement growth and improving profitability offer compelling reasons to consider the stock for medium-term gains.
Long-Term Opportunity: The company’s strategic focus on renewable energy financing positions it as a vital player in India’s energy transition, making it an attractive investment for long-term portfolios.

Conclusion: A Growth-Oriented Outlook for IREDA

IREDA’s Q3 performance demonstrates its robust operational and financial resilience, highlighted by strong profit growth, rising interest income, and increased loan disbursements. While the recent stock decline reflects investor caution, the company’s strategic fundraising plans and alignment with India’s renewable energy goals offer significant upside potential. Investors should keep a close eye on developments in the QIP/FPO process, as well as the broader renewable energy financing landscape, to make informed decisions.