Izgledi dionica IREDA: Hoće li nadvladati nedavni silazni trend do razine od 250 INR?

Sektor obnovljive energije u Indiji neprestano se razvija. Unutar ovog sektora, jedna tvrtka (dionica) koja se ističe je IREDA (Indian Renewable Energy Development Agency Limited). Kom[any is not only contributing to its sector for is also known for its dynamic performance in the stock market (Up by 3.38x since its IPO listing in Dec’23). With the global push towards sustainable energy solutions, IREDA has positioned itself as a key player in India. In this article we’ll see what’s fuelling its recent trendiness in the investment world?1. IREDA’s Role in Renewable EnergyFounded in 1987, IREDA has been financing renewable energy projects in India. IREDA is a government-owned company under the Ministry of New and Renewable Energy (MNRE).As a Mini Ratna (Category – I) and now a Navratna public sector enterprise, it has been instrumental in the development of solar, wind, hydro, and other renewable energy sources. IREDA is dedicated to financing renewable energy projects in India.Its primary objective is to promote, develop, and extend financial assistance for projects related to renewable energy sources, energy efficiency, and conservation.With India’s ambitious targets for renewable energy, IREDA’s role has never been more crucial. It is especially true given the country’s status as the world’s third-largest consumer and producer of renewable energy.1.1 Key Points About IREDAFunding for Renewable Projects: IREDA funds a wide range of renewable energy initiatives, including solar, wind, biomass, and small hydro projects. This financing has helped scale up the adoption of clean energy in India.Green Bonds: IREDA has issued green bonds to raise capital specifically for renewable energy projects.Government Ownership: Being a Public Sector Undertaking (PSU), IREDA benefits from the government’s support. It enables it to offer favorable lending terms for renewable projects.Role in India’s Energy Goals: IREDA plays a significant role in India’s target of achieving 500 GW of renewable energy capacity by 2030. It aligns its projects with national policy goal of transitioning India to a low-carbon economy.2. Stock Market PerformanceIREDA’s stock has experienced significant volatility and growth.For instance, it recently hit a new 52-week high of around Rs.310 around July’2024. In those days, the retail investors & DIIs were driving this stock to new highs. This performance has outshined the sector and even the broader market indices like the Sensex and Nifty.IREDA was at the focal point for investors looking into the renewable sector.Price Surge: Between 25-Oct’24 and 01-Nov’24, IREDA stock price saw an increase of over 10.5%. It is a clear indication of strong market’s interest coming back for IREDA.Current Price and Moving Averages:Current Price: Rs.211200-Day Moving Average (200MVA): Rs.196.7100-Day Moving Average (100MVA): Rs.229.550-Day Moving Average (50MVA): Rs.22620-Day Moving Average (20MVA): Rs.213Inference: IREDA’s current price above its 200-day MVA suggests a positive long-term trend. But short-term and medium-term weakness is indicated as it falls below its 100-day, 50-day, and slightly below its 20-day MVA. This pattern suggests that while the stock has long-term strength, there may be short-term consolidation or minor downward pressure.Financial Growth: The second quarter of FY24 reported a 13% year-on-year growth in Profit After Tax (PAT), with total income and Profit Before Tax (PBT) also showing healthy increases.3. Fundamental AnalysisBased on the financial data I’ve collected from my Stock Engine, here’s a brief fundamental analysis of the company:3.1 Financial Health and SolvencyThe company has maintained a stable liquidity position over the years, with a current ratio of 1.17 and a similar quick ratio, indicating sufficient assets to cover short-term liabilities.The debt-to-equity (D/E) ratio has seen fluctuations. It peaked at 8.62 in FY 2020 but had gradually declined to 5.8 levels in recent years. This high D/E ratio signals a dependency on debt for growth.Although, the interest coverage ratio (ICR) of 1.5 indicates manageable debt-servicing capabilities.However, high leverage may pose risks if interest rates increase or revenue growth slows.3.2 Profitability and EfficiencyThe company’s gross margin of 100% (likely due to its financing nature). It suggests no direct cost of goods, typical for financial firms.EBITDA margin is strong at 93.57% in TTM, with consistent profitability reflected in PAT margins around 24.96%.The company has shown improving return on equity (ROE) and return on capital employed (ROCE), which have risen to 16.87% and 47.67% respectively in TTM. It is an indication of efficient capital utilization.However, the negative operating cash flows over multiple years suggest cash management issues or heavy reinvestment, which needs close monitoring.3.3 Valuation and GrowthThe current P/E ratio of 38.53 implies a premium valuation. It is likely due to positive market sentiment towards renewable energy finance companies.Earnings growth has been steady. Quarterly EPS holding around Rs. 1.44–1.25 in recent quarters, reflecting stable revenue performance.Yet, the free cash flow remains negligible, raising concerns over cash generation from operations.The company’s large reserves and net worth provide a buffer. But consistent negative cash flow from operations suggests a need for improved cash management. There must be a stronger focus on sustainable cash-generating activities.Overall, while the company shows strength in profitability and capital efficiency, liquidity and cash flow management are areas for improvement.ConclusionIREDA’s journey in the stock market reflects not just the company’s performance but also the broader narrative of renewable energy in India.For investors, IREDA presents an opportunity to invest in the green energy transition, backed by solid government support and a clear growth trajectory in the sector.However, like any stock, it comes with risks that investors must weigh against potential rewards.Keeping an eye on market trends, policy changes, and IREDA’s fundamental health will be key for anyone looking to ride the wave of this renewable energy financier’s stock.Note: In the near term, I think the stock will remain under pressure due to consistent selling happening in the market. But in the medium term, the stock will touch the Rs.250 levels (up by 18%). For me, the fundamentals of the company looks fair, so the stock will touch the high’s as the market sentiments improve.Have a happy investing.