IREDA IPO 9.5 times on day 3 so far; bidding for the issue closes today

The initial public offering (IPO) of Indian Renewable Energy Development Agency (IREDA) continued to witness a strong buying intested from the investors during the third and final day of the bidding process. The issue was booked 1.96 times on day one and ended the second day with 4.56 times subscription.

IREDA is raising a total of Rs 2,150.21 crore via its initial stake sale in the fixed price band of Rs 30-32 per share in the lot size of Rs 460 equity shares and its multiples thereof. The PSU miniratna by the Ministry of Renewable Energy is raising Rs 1,290.13 crore via fresh issue, while the Government of India is selling 2.69 crore equity shares via OFS.

According to the data, the investors made bids for 4,49,25,76,660 equity shares, or 9.54 times, compared to the 47,09,21,451 equity shares offered for the subscription by 12.50 pm on Thursday, November 23. The bidding for the issue had opened on Tuesday, November 21, and concluded today.

The portion reserved for non-institutional investors (NIIs) was subscribed 14.64 times, while the allocation for qualified institutional bidders (QIBs) was booked 11.96 times. The portion for employees saw a subscription of 7.31 times and the quota set aside for retail investors was booked 5.99 times as of the same time.

Majority of the brokerage firms tracking the PSU issue are positive on it and have suggested to subscribe to it. They see trong balance sheet, backing of the Government, diversification and expansion in emerging green technologies, robust order books and solid asset quality as the key positive for the company in the long-run.

At the upper price band of Rs. 32 the company is valued at the P/BV multiple of 1.09 times at its H1FY24 post IPO book value per equity share of Rs 29.28 which is at a discount to the other listed peer power finance NBFC having an average P/BV multiple of 1.3 times, said Ajcon Global Services with a 'subscribe' rating on the issue.

Ahead of its IPO, IREDA raised up to Rs 643.26 crore from 58 anchor investors as it allocated 20,10,19,726 shares at an issue price of Rs 32 per share. IDBI Capital Market Services, BoB Capital Markets and SBI Capital Markets are the lead managers to the issue, while Link Intime is the registrar.

"We believe the growth trajectory is pretty steep for renewable energy in India and that should translate into healthy growth for IREDA further if the company can continue to maintain asset quality at decent levels we believe the stock could easily command P/B multiples of 1.5-2 times, hence we recommend to subscribe to the issue as a good long term investment," said SMIFS.

It operates with a distinctive business model tailored to a niche market. The government's increased focus on renewable energy, aiming for 50 per cent of energy needs to be met by renewables by 2030, serves as a pivotal driver for the sector. The company is poised to capitalize on this opportunity, said SBICap Securities.
 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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