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May 21, 2024

IREDA’s Growth Trajectory Continues: Plans Follow-On Public Offering to Bolster Financial Strength

In a strategic move to fortify its financial robustness amidst an expanding green energy landscape, the public sector non-banking financial company (NBFC) IREDA Limited unveils plans to issue a follow-on public offering (FPO) within the ongoing financial year. With the backing of the Ministry of New and Renewable Energy (MNRE), IREDA is poised to raise Rs 24,200 crore in the fiscal year 2024-25, marking a significant milestone in its growth trajectory.

Having debuted on Dalal Street in December 2023 following a successful initial public offering (IPO), IREDA has emerged as the solitary public sector NBFC dedicated exclusively to green energy sectors. P K Das, the Chairman and Managing Director of IREDA, articulated the necessity for augmenting equity capital, citing the escalating project sizes within the green energy domain. “Raising debt is not a hurdle for us,” Das affirmed, underlining the imperative to bolster equity capital to accommodate the sector’s burgeoning needs.

While refraining from disclosing the precise FPO amount, Das emphasized its alignment with the company’s growth prospects and the overarching trajectory of the sector. The envisaged loan disbursal target for the current financial year surpasses Rs 30,000 crore, reflecting IREDA’s unwavering commitment to catalyze the momentum of green energy initiatives. During the preceding fiscal year, IREDA disbursed loans amounting to Rs 25,089 crore, signifying a steadfast progression in its operational endeavors.

A recent approval from IREDA’s board delineates a comprehensive borrowing plan of Rs 24,200 crore for the fiscal year 2024-25, encompassing diverse financial instruments such as bonds, perpetual debt instruments (PDI), term loans, commercial papers, and external commercial borrowings (ECB). Notably, Das accentuated the primacy of the domestic market in their debt-focused endeavors, alongside a concerted effort to leverage the burgeoning potential of the Indian bond market.

In a bid to widen its market reach and amplify its financial avenues, IREDA has petitioned the government for inclusion in the capital gains exemption bond under Section 54EC of the Income Tax Act, 1961. Das underscored the company’s unequivocal commitment to green initiatives, highlighting its eligibility for inclusion in the esteemed 54EC category, akin to its counterparts in the energy sector lending domain.

In a strategic move to bolster its international footprint, IREDA recently established a subsidiary in Gift City, Gujarat, poised to engage with green energy sectors exhibiting export potential. With a focus on foreign currency lending, the subsidiary is primed to tap into burgeoning segments such as solar manufacturing and the green hydrogen manufacturing ecosystem. Additionally, for retail sectors like solar rooftop, IREDA envisages collaborative lending ventures with other NBFCs or banks, fostering synergistic growth avenues.

The commendable trajectory of IREDA is underscored by a staggering 44.2 per cent increase in its net worth over the last financial year, culminating in a robust figure of Rs 8,559.43 crore as of March 31, 2024. As IREDA navigates the dynamic landscape of green finance, its forthcoming FPO and strategic initiatives epitomize its unwavering commitment to spearhead sustainable financing solutions in the renewable energy domain.

Jhumpa Lahiri

Jhumpa Lahiri

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