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Q1 FY26 Financial Analysis of IREDA

Lesson 151/173 | Study Time: 10 Min

Course: Quarterly Result Updates & Analysis

Q1 FY26 Financial Analysis of IREDA

1. Recent Insights and Highlights

Key Highlights from Management Commentary:

IREDA has received permission from CBDT to issue Capital Gain Tax Exemption Bonds under Section 54EC, enhancing its funding avenues and potentially reducing borrowing costs.
Successfully raised ₹2,005.90 crore through a Qualified Institutional Placement (QIP), boosting the capital base significantly.
Notable strategic achievement: Navratna status, enhancing its prestige and operational autonomy.
Expanded operational capabilities, including infrastructure finance company status and establishment of a wholly-owned subsidiary in IFSC GIFT City.

2. Consolidated Financial Analysis

Income Statement (₹ crores):

Metric	Q1 FY26	Q4 FY25	Q1 FY25	YoY % Change	QoQ % Change
Revenue from Operations	1,947	1,904	1,511	28.9%	2.3%
Net Profit	247	502	384	-35.7%	-50.8%

Profit Margins:

Margin Metrics	Q1 FY26	Q4 FY25	Q1 FY25
Operating Margin	15.0%	33.1%	31.5%
Net Profit Margin	12.6%	26.2%	25.4%

3. Profitability, Growth & Valuation Ratios (@ CMP ₹169)

Ratio	Value
Return on Equity (Annualized)	~7.96%
Return on Capital Employed	~3.85%
Trail Earnings Per Share (EPS)	₹5.8
Trail Price-to-Earnings (P/E) Ratio	29.3x

4. Industry-Specific KPIs (NBFC Sector)

KPI	Q1 FY26	Q1 FY25	YoY Change
Loan Book Outstanding (₹ crores)	79,941	63,207	26.5%
Sanctioned Loans (₹ crores)	11,740	9,136	28.5%
Disbursed Loans (₹ crores)	6,981	5,326	31.1%
Gross NPA (%)	4.13%	2.19%	88.6%
Net NPA (%)	2.06%	0.95%	116.8%
Net Interest Margin (Annualized %)	3.60%	3.27%	10.1%

5. Near-Term and Long-Term Outlook

Near-Term Outlook (Next 1-2 Quarters):

Strong loan disbursement momentum anticipated, supported by increased borrowing capacity and improved credit profile.
Cautious management of asset quality expected due to increased NPAs and economic uncertainty.

Long-Term Outlook:

Favorable long-term prospects driven by India’s ambitious renewable energy targets and supportive government policies.
Expansion of financing instruments (like 54EC Bonds) expected to reduce borrowing costs, improve margins, and stimulate renewable energy investments.
Enhanced corporate status (Navratna and IFC status) to provide operational flexibility and strategic opportunities.

6. Conclusion for Long-Term Investors

Positives:

Strong capital position post-QIP, aiding expansion.
Strategic advantages from regulatory permissions (54EC bonds).
Significant growth in loan book and disbursements.

Potential Risks:

Rising Gross and Net NPAs indicating stress in asset quality.
High valuation with elevated P/E ratio suggesting limited near-term upside.

Investment Stance:

Cautiously Optimistic: While fundamentals are strong, investors should monitor asset quality closely and evaluate entry points considering high valuations.

7. Disclosure

"This analysis is provided solely for informational purposes and does not constitute investment advice. Investors should perform their own due diligence before making investment decisions."

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Piyush Patel

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