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🌿 IREDA: Powering India’s Green Finance Revolution

Lesson 86/225 | Study Time: 10 Min

Course: Top Quality Companies

🌿 IREDA: Powering India’s Green Finance Revolution

📘 A Deep-Dive for Long-Term Investors | FY26–FY35 Outlook | Date: 31st July 25

🏦 Company Overview

Indian Renewable Energy Development Agency Ltd (IREDA) is a government-backed non-banking financial company (NBFC) under the Ministry of New and Renewable Energy (MNRE), primarily focused on funding renewable energy and energy efficiency projects across India.

Since its incorporation, IREDA has played a pivotal role in India’s energy transition by financing solar, wind, biomass, hydro, and other clean energy projects.

🌱 Industry Outlook: Green Financing in India

India’s target of 500 GW of non-fossil fuel capacity by 2030 demands over ₹20 lakh crore in investments. The government’s focus on energy security, sustainability, and climate action has created a multi-decade runway for clean energy NBFCs like IREDA.

📊 Key Drivers of Industry Growth:

Regulatory push via Renewable Purchase Obligations (RPOs)
Green Hydrogen & Solar Missions
ESG-led global investment flows
Decarbonization mandates for corporates and utilities

📈 IREDA’s Financial Growth: AUM, Revenue, Profit

Year	AUM (₹ Cr)	Revenue (₹ Cr)	Profit (₹ Cr)
FY17	—	1,331	210
FY18	—	1,810	405
FY19	—	2,020	250
FY20	—	2,369	215
FY21	27,854	2,655	347
FY22	33,931	2,860	634
FY23	47,076	3,482	865
FY24	59,698	4,964	1,252
FY25	76,282	6,743	1,698
T12M FY26	79,941	7,180	1,561

📌 CAGR (FY20 to FY25):

AUM: ~29%
Revenue: ~24%
Profit: ~45%

💹 Profitability & Margin Trend

Year	Net Profit Margin
FY17	16%
FY18	22%
FY19	12%
FY20	9%
FY21	13%
FY22	22%
FY23	25%
FY24	25%
FY25	25%
T12M FY26	22%

🔍 Comment: Stable margins above 22% post FY22, though Q1 FY26 shows a dip due to one-time impairment cost.

🧾 Q1 FY26 Performance Snapshot

Metric	Q1 FY26	Q1 FY25	YoY Change
AUM	₹79,941 Cr	₹63,207 Cr	26%
Sales	₹1,947 Cr	₹1,510 Cr	29%
Profit	₹247 Cr	₹384 Cr	-36%
EPS	₹0.91	₹1.43	-36%
Margin	12.7%	25.4%	↓ -12.7%
GNPA %	4.13%	2.19%	↑ 1.9%

⚠️ One-time impairment cost led to margin compression; investors should monitor asset quality.

📊 Key Cost Analysis – Q1 FY26

Expense Head	Q1 FY26 (₹ Cr)	Share %	Growth
Finance Cost	1,218	74%	25%
Impairment	363	22%	↑1310%
Employee Benefit	21	1%	5%
Others (CSR, D&A)	53	3%	6–33%
Total Cost	1,655	100%	60%

📉 Historical Valuation Range

Price-to-Earnings (PE)

Year	High PE	Low PE
FY24	50	42
FY25	49	22
T12M FY26	32	24

Price-to-Book Value (PBV)

Year	High PBV	Low PBV
FY24	7	2
FY25	8	4
T12M FY26	4	3

📌 Valuation is moderating post IPO but remains at a premium, driven by growth visibility.

📅 Growth Forecasts

Metric	FY26E	FY30E	FY35E
AUM (₹ Cr)	95,353	2,37,268	5,90,398
Revenue (₹ Cr)	8,766	21,812	54,276
Profit (₹ Cr)	1,674	5,469	13,610
EPS (₹)	6.3	20.4	50.9
Margin	19.1%	25%	25%

💸 Valuation-Based Price Range

Year	EPS	Book Value (₹)	Low (₹)	Fair (₹)	High (₹)
FY26E	6.3	₹50	₹94	₹156	₹250
FY30E	20.4	₹105	₹307	₹511	₹818
FY35E	50.9	₹210	₹763	₹1,271	₹2,034

📊 Portfolio Allocation Strategy

Based On	Weightage
EPS	1.46%
Book Value	1.42%
PEG	2.52%
Actual Allocation	1.80%

📌 Suitable for green energy-focused portfolios or ESG mandates.

🔍 Technical View

IREDA Monthly Chart Outlook:

📉 Recent consolidation near ₹150 after IPO listing
📍 Support Zones: ₹150–₹105
🎯 Upside Targets: ₹260 over 1–2 years
🟩 Strong base formation underway; ideal for staggered accumulation

✅ Conclusion: Long-Term Risk–Reward Outlook

IREDA is a strategic green lender with long-term potential. While short-term margin pressure and GNPA uptick raise caution, the long-term opportunity in clean energy lending is massive.

📈 Risk: