IREDA IPO subscribed 4.56 times on day two: From GMP to brokerage views, here's all you need to know
Indian Renewable Energy Development Agency (IREDA) IPO continued to receive a robust response from investors. The issue was subscribed 4.56 times on the second day of bidding, November 22, 2023.
Indian Renewable Energy Development Agency (IREDA) IPO continued to receive a robust response from investors. The issue was subscribed 4.56 times on the second day of bidding, November 22, 2023. It has received bids for 2,14,70,52,300 shares against 47.09 crore shares on offer.
The category for non-institutional investors (NII) was subscribed to the most, 7.74 times, followed by the portion reserved for retail investors, which saw 4.26 times bids. Meanwhile, the qualified institutional buyers (QIBs) quota was subscribed to 2.69 times. Employee portion also saw 4.99 times subscription.
GMP: The company's shares in the grey market are trading at a healthy premium of ₹10, indicating an over 31 percent premium at listing.
However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.
About the IPO
The ₹2,150.21 crore IPO of the PSU opened for subscription on November 21 and will close on November 23. The price band for the offer has been set at ₹30-32 per share. A bidder will be able to apply in lots and one lot of the IPO comprises 460 company shares. Minimum amount required for a retail investor to apply for the IPO is ₹14,720 ( ₹32 x 460).
The issue comprises of a fresh share sale worth ₹1,290.13 crore and an offer for sale (OFS) by the Government of India for 268,776,471 equity shares aggregating up to ₹860.08 crore. The net proceeds from the fresh issue shall be utilized towards augmenting the capital base to meet future capital requirements and onward lending.
The firm has also raised ₹643.26 crore from 58 anchor investors on November 20, allocating 20.10 crore shares at ₹32 apiece including Goldman Sachs, Integrated Core Strategies (Asia), Societe Generale, GAM Star Emerging Equity, BNP Paribas Arbitrage, Moon Capital Trading, and Copthall Mauritius participated in the anchor book.
IREDA IPO has reserved not more than 50% of the shares in the public issue for Qualified Institutional Buyers (QIB), not less than 15% for Non-Institutional Investors (NII), and not less than 35% of the offer is reserved for Retail Investors.
In the wake of the T+3 schedule, the tentative date for finalisation of share allocation is either 24th November 2023 or 27th November 2023. This means the IREDA IPO allotment date may fall either on Friday next week or on Monday falling after the end of next week.
BoB Capital Markets, IDBI Capital Market Services and SBI Capital Markets are the book-running lead managers to the issue, while Link Intime India Private has been appointed as the registrar. Shares of the company will be listed on both BSE and NSE.
Should you subscribe?
Anand Rathi: Subscribe
The company has a track record of growth, geared toward high-quality assets and a diversified asset book and stable profitability. At the upper price band, the company is valued at a P/BV of 1.3 times with a market cap of ₹8,600.85 crore post-issue of equity shares. We believe that the issue is fairly priced and recommend a 'subscribe' rating to the IPO.
MOSL: Subscribe
IREDA operates in the niche segment of RE which is poised to grow at a rapid pace with the government's increased focus. Further, the elevation of IREDA to the ‘Schedule A’ category opens the door for “Navratna” status, which would strengthen the balance sheet further. This along with the lowest cost of funding and stringent corporate governance provides IREDA a competitive edge. The stock is attractively priced at 1.0x 1HFY24 P/BV (on an annualized & diluted basis). Hence, we recommend Subscribe.
Geojit: Subscribe
At the upper price band of ₹32, IREDA is available at a P/B of 1.4x (FY23), which is at a discount to its peers. Power-financing NBFCs are expected to continue this growth momentum, and this growth is likely to be driven by an increase in power demand, a rise in population, renewable integration, and the sustainability goals of the country.
With consistent growth in loan books, healthy return ratios, and varied financial products, IREDA is well-placed to capitalize on the growth in the RE sector. We assign a “Subscribe” rating on a medium- to long-term basis.
AUM Capital: Subscribe
The world economies including India are striving to move towards Net Zero Carbon Emission. To fulfill that aim, the role of Renewable Energy (RE) is very important and a critical one as conventional sources of energy like coal deplete. IREDA is expected to play an important role in the long-term perspective in financing RE projects to fulfill India’s commitment to the world with respect to climate change proposals. We would hence recommend a SUBSCRIBE to the issue.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.