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Business News/ Markets / Stock Markets/  IREDA stock tumbles 32% from all-time high; is there more pain ahead for this PSU stock?

IREDA stock tumbles 32% from all-time high; is there more pain ahead for this PSU stock?

IREDA shares continue downward trend, dropping 4.15% to ₹146.55 per share in intraday trading. Stock hit all-time high of ₹214.80 on Feb 06, now down 32% from that peak.

Among power financing NBFCs, the company has the largest share of credit towards the RE sector other than Power Finance Corporation.Premium
Among power financing NBFCs, the company has the largest share of credit towards the RE sector other than Power Finance Corporation.

Continuing their bearish trajectory, shares of IREDA, a power financing NBFC, experienced a 4.15% decline to 146.55 per share in today's intraday trading session, following a 5% drop in the previous session. 

After reaching a record high, the stock has been on a downward trend, consistently setting new intraday lows each day. On February 06, the stock reached an all-time high of 214.80 per share. However, profit-taking by investors has led to a correction of 32% since that peak.

The stock made its debut on Indian exchanges on November 29, listing at 60 apiece, against its issue price of 32. In less than two weeks post listing, the stock experienced a remarkable 105.33% surge. Even with the recent adjustment, the stock remains 358% above its IPO price of 32.

Also Read: IREDA, Zaggle Prepaid, and Vibhor Steel Tubes among 66 companies to see IPO lock-in expire in four months

Rajesh Bhosale, Technical Analyst, at Angel One, said, "The stock appears to have bearish momentum is prevailing, with the next significant level likely around 130, representing a key retracement level from the initial rally and the 89-day exponential moving average. A breach below this level could signal further weakness."

"Conversely, there's a likelihood that any immediate rebound in the short term could attract for latecomers who entered at higher levels to exit their long positions. In such a scenario, immediate resistance is anticipated around the 165–175 zone," he added.

Suman Bannerjee, CIO, of Hedonova, a Paris Based Hedge Fund, said, "The stock's chart shows a bearish trend, falling below the important support level of 155. It indicates negative investor sentiment and suggests it might drop further if it doesn't quickly get back above this level. The next support level to watch is 139; if the stock falls below this, the bearish trend could worsen."

For a bullish trend, Suman said that the stock needs to move above the resistance area of 170–173, reversing the current negative view and possibly starting an upward trend. Such a move, he said, would indicate a change for the better, suggesting a gathering of interest and potentially drawing more buyers, shifting the market in the stock's favor.

The stock has fallen below the key 155 support level signals a growing bearish trend and suggests more declines could follow if it doesn't quickly rebound. 

"With the next support at 139, a near-term turnaround looks unlikely, especially with strong resistance at 170–173. The market's current state points to ongoing declines, making a shift to a bullish trend difficult. Therefore, investors should be prepared for possible further decreases, as conditions for a positive change aren't currently evident," Suman Bannerjee further stated. 

Recent developments

Looking at the recent developments, IREDA and Punjab National Bank have joined hands through the signing of a Memorandum of Understanding (MoU) aimed at advancing renewable energy initiatives across the country. 

The MoU comprises various provisions aimed at enhancing support for renewable energy projects. These include joint lending, loan syndication and underwriting, management of Trust and Retention Account (TRA) for IREDA borrowers, and working towards competitive terms of sanction, including pricing on IREDA borrowings. Also, both IREDA and PNB can invest in the bonds issued by either organisation through this collaboration, as per the company's exchange filing dated February 19. 

Also Read: Multibagger? Ventura sees Religare Enterprises surging 128% in 2 years; 5 reasons why

This collaboration further strengthens IREDA's successful partnerships with other prominent financial institutions, including Bank of Baroda, Bank of India, Union Bank of India, India Infrastructure Finance Company Limited, Bank of Maharashtra, and Indian Overseas Bank.

IREDA (Indian Renewable Energy Development Agency) is an NBFC established in 1987 to provide innovative financing in RE and energy efficiency, conservation, and environmental technologies. It is a wholly owned Government of India (“GoI") enterprise under the administrative control of the Ministry of New and Renewable Energy (the “MNRE").

Also Read: RIL, HDFC Bank, SBI, Maruti among 19 high-conviction ideas for March by InCred Equities; check full list here

Among power financing NBFCs, the company has the largest share of credit towards the RE sector other than Power Finance Corporation, which is also present in sectors such as infrastructure, roads, mining, and others, while the company is completely focused on the RE sector.

In the recent December quarter (Q3FY24), the company posted a 67.15% YoY rise in its net profit to 335.54 crore, while it reported revenue from operations at 1,252.85 crore, a 44.22% YoY jump compared to 868.67 crore posted in the corresponding quarter of last fiscal year.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 05 Mar 2024, 02:28 PM IST
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