The shares of miniratna company Indian Renewable and Energy Development Agency Ltd (IREDA) debuted at a healthy premium of 56% on the exchanges in Wednesday's (November 29) trade. The stock listed at ₹50 on the NSE and the BSE over the IPO price of ₹32 apiece. Post listing, the stock went on to hit a day's high of ₹59.85, up 87% from its issue price.

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With this, the state-run company became the second most successful PSU listing in the last 10 years.

Listings

"IREDA listing was above Street expectations. We believe post listing there would be decent demand for the shares as it had received overwhelming response from all kinds of investors especially from long term funds. We also believe IREDA can act as a proxy play for the growth in the Indian renewable energy sector," said Prashanth Tapse of Mehta Equities.

Tapse believes IREDA gives allotted investors a long term opportunity to hold and raid the growth in the sector it serves. Hence, he recommended all allotted investors to 'hold for long term', while those who failed to get allotments can accumulate on every dip for holding it for healthy long term returns, citing the company's visibility and growth potential.

IREDA's listing was above the market expectations, reflecting the strong fundamentals and growth potential of the company, said Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.

"IREDA's strong financial performance and focus on the burgeoning renewable energy sector make it an attractive investment proposition. The renewable energy sector is poised for significant growth in the coming years, driven by government initiatives and increasing environmental concerns," Nyati said.

What should investors do now?

Analysts recommended investors to book partial profit and hold the remaining allotment as IREDA has a track record of growth, high quality assets, diversified asset book and stable profitability.

Prathamesh Masdekar of Stoxbox said investors who have received allotment can hold their shares from a medium to long-term perspective.

According to Shivani Nyati, the company's long-term prospects appear promising, making it a worthwhile investment for those with a long-term investment horizon.

IREDA GMP

Ahead of its market debut, IREDA shares were commanding a premium of ₹12 in the unlisted market.

The grey market is an unofficial platform wherein the IPO shares can be bought and sold till the listing. Most investors generally get a bit of help from the grey market to guess the possible listing price of any public offer.

The IPO received a positive response from investors with subscriptions of 38.8 times at close. The quota set aside for retail individual investors (RIIs) was subscribed 7.7 times, qualified institutional buyers 104 times, and NII 24 times.

IREDA’s ₹2,150 crore worth IPO was open for subscription between November 21 and November 23. The company sold its IPO in the range of ₹30-32 apiece with a lot size of 460 shares.

Considering the upper price band, the post issue implied market capitalisation of the company would range between ₹8,063 crore and ₹8,601 crore, analysts say.

The IPO comprised of a fresh issue of 40.32 crore shares aggregating to ₹1,290.13 crore and an offer for sale (OFS) of 26.88 crore shares worth ₹860.08 crore.

The PSU miniratna will utilise the capital raised to augment the capital base to meet future capital requirements and onward lending. The state-run company expects to receive the benefits of listing the equity shares on the stock exchanges.

IREDA is the country's first PSU IPO to hit the market this year and the first after LIC's stock market debut in May 2022. LIC currently is India's largest IPO.

The company is India's largest pure-play green energy financing NBFC and plays a strategic role in the development of renewable energy with a comprehensive suite of financial products and other value chain activities, such as equipment manufacturing and transmission.

First Published:Nov 29, 2023 9:52 AM IST