IREDA, a Navratna PSU company, witnessed its share price decline by over 3% on Friday following the release of its Q3FY25 results. The stock fell as much as 3.4%, reaching ₹208.50 apiece on the BSE. Despite this dip, the company reported notable financial performance for the quarter, highlighting opportunities for long-term share market investment enthusiasts.
Key highlights from IREDA's Q3FY25 performance
Financial growth and revenue surge
IREDA posted a net profit of ₹425.38 crore in Q3FY25, marking a 27% growth compared to ₹335.5 crore in the same period last fiscal year. The company's total revenue from operations surged by 35.6% YoY to ₹1,698.45 crore, showcasing its robust position in the renewable energy financing sector.
Net interest income (NII) also grew by 39% YoY to ₹622.3 crore, reflecting improved operational efficiency. However, operating margins dropped by 330 basis points to 30.42%, a slight concern for investors monitoring profitability.
Asset quality and loan book growth
IREDA's gross non-performing assets (NPAs) improved, falling to 2.68% in Q3FY25 from 2.90% in Q3FY24, indicating better asset quality management. The outstanding loan book grew by an impressive 36%, reaching ₹68,960 crore compared to ₹50,580 crore the previous year.
Market sentiment: A buy opportunity?
Analysts have mixed views on IREDA's stock. While the Q3FY25 results showcase strong fundamentals, the recent dip in share price provides an opportunity for share market investment in the renewable energy space.
Analysts believe IREDA's growth in loan disbursements and stable asset quality reflects a positive trajectory. They anticipate future earnings growth, driven by the company's ability to manage margins effectively.
The company's strategic focus on renewable energy opportunities suggests IREDA is well-positioned for long-term expansion. Analysts consider the recent price drop a buying opportunity for long-term investors.
Stock market analysts advise existing investors to hold the stock with a near-term target of ₹230 and a medium-term target of ₹260. Analysts also suggest fresh investors consider a share market investment in IREDA, especially if the stock surpasses ₹230 on a closing basis.
Stock performance and future outlook
Over the past year, IREDA shares have delivered a remarkable return of 105% despite recent fluctuations. The stock touched its 52-week high of ₹310 in July 2024 and its 52-week low of ₹101.20 in January 2024. While the short-term trend appears sideways, the company's focus on renewable energy positions it as a strong contender for sustained growth.
Summing up
As of 11:58 AM on January 10, 2025, Indian Renewable Energy Development Agency Ltd (IREDA) shares declined by 2.41% on the BSE, trading at ₹210.70 per share. This drop comes despite a robust 26.7% year-on-year surge in combined net profit for the quarter ending December 31, 2024.
The Q3FY25 results revealed strong revenue growth, improved asset quality, and a significant 36% expansion in the company's loan book. Analysts remain optimistic about IREDA's potential for long-term profitability, citing its strategic focus on renewable energy financing. While the share price dipped, investors are encouraged to view this as an opportunity for share market investment, with technical levels and the sector's growth prospects warranting close monitoring.
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