IREDA clears equity investment to set up power project in Nepal; stock down 6%

Indian Renewable Energy Development Agency (IREDA) Ltd on Tuesday said its Board approved an equity investment of up to 10 per cent shareholding in GMR Upper Karnali Hydro Power Ltd and Karnali Transmission Company Pvt Ltd to set up a 900 MW Hydroelectric Power Project in Nepal. The investment amount for the project, which is associated with SJVN Ltd, is around Rs 290 crore.

"The Board of Directors of IREDA in its meeting held today, July 16, 2024, has accorded In-principle approval for equity investment of up to 10 per cent shareholding each in M/s GMR Upper Karnali Hydro Power Limited, Nepal, and M/s Karnali Transmission Company Pvt Ltd, Nepal (aggregating to Rs 290 Crore for both the SPVs), in association with SJVN Ltd, for setting up 900 MW Upper Karnali Hydro-Electric Power Project in Nepal, subject to the approval from the Govt. of India, other statutory/regulatory authorities, as applicable," the renewable energy PSU stated in a BSE filing.

"GMR and Nepal Electricity Authority, Govt of Nepal are the existing shareholders of M/s GMR Upper Karnali Hydro Power Limited, Nepal," it added.

On the stock-specific front, IREDA shares settled lower today, pausing their four-day record run. The scrip moved 6.06 per cent down to close at Rs 272.25. At this price, it has slipped 12.18 per cent from its all-time high of Rs 310, a level seen on July 15.

Despite the mentioned drop, the counter has given multibagger returns by rallying 160.15 per cent on a year-to-date (YTD) basis. With that being said, the IREDA's share price has seen a massive uptick from its initial public offering (IPO) price of Rs 32. It was listed on November 29 last year.

On the earnings front, the state-run firm said its profit after tax (PAT) climbed 30 per cent to Rs 384 crore for the June quarter (Q1 FY25) compared with Rs 295 crore in the corresponding quarter of last year.

During the quarter under review, revenue from operations grew 32 per cent year-on-year (YoY) to Rs 1,510 crore from Rs 1,143 crore in the same quarter last year. IREDA said its outstanding loan book stood at Rs 63,207 crore in Q1 against Rs 47,207 crore in the year-ago quarter, up 34 per cent.

Brokerage PhillipCapital maintained its 'Sell' rating on the stock, saying that the recent rally on the counter was driven by passive flows rather than any major fundamental reason.

"We believe the best is already priced in to the stock. We maintain SELL rating with revised target of Rs 130 (Rs 110 earlier), valuing the company at 3x FY26 ABVPS of Rs 42," it stated.

IREDA is a 'Navratna' PSU under the administrative controls of the Ministry of New and Renewable Energy. As of June 2024, the government held a 75 per cent stake in it.

The organisation offers financial products (fund- and non-fund-based) associated services, from project inception to post-completion, for renewable energy projects and related activities like equipment manufacturing and transmission.