IREDA shares correct after gaining over 100% since listing; what should investors do?
Indian Renewable Energy Development Agency (IREDA) witnessed some consolidation in December last year. However, brokerage house Phillip Capital believes this recent decline is going to last. The brokerage has a ‘sell’ call on the stock with a target price of ₹80, implying a downside of over 23 percent from its current market price of ₹104.40, as of December 4.
"IREDA to see strong loan growth over FY23-26 on rising demand for renewable energy in the country. But the earnings growth is not expected to match the loan growth due to pressure on margins and normalisation of credit costs (which was negative in H1FY24). While loan growth is high, return ratios are weak and there is higher exposure to the private segment – which undermines conviction.
We believe the best is already priced into the stock. We initiate coverage with a SELL rating," explained the brokerage. IREDA was listed on the Indian exchanges on November 29, 2023, at ₹60 apiece, an 87.5 percent premium over the issue price of ₹32.
It continued the same upward trajectory for the next 11 sessions, achieving a record high of ₹123.30 apiece on December 14, 2023, surging 105.6 percent from its listing price and 285.5 percent from its IPO price. However, after hitting its record high, the stock consolidated a bit and has shed a little over 15 percent since then. Just in December last year, the stock jumped 57.4 percent and it has added 2.5 percent in the 5 sessions of January 2024.
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