IREDA IPO subscribed 58% in the first two hours; retailers & NIIs lead bidders

The initial public offering (IPO) of Indian Renewable Energy Development Agency (IREDA) saw a strong buying intested from the investors during the initial two hours of the bidding on day one. The PSU player's primary offering kicked off-for subscription on Tuesday, November 21.

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. Of the block, 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 27,22,59,740 equity shares, or 58 per cent, compared to the 47,09,21,451 equity shares offered for the subscription by 12.10 pm on Tuesday, November 21. The three-day bidding will conclude for bidding on Thursday, November 23.

The portion reserved for retail investors was subscribed 90 per cent, while the allocation for employees was booked 83 per cent. The portion for non-institutional investors (NIIs) saw a subscription of 59 per cent. The quota set aside for qualified institutional bidders (QIBs) was not even off the mark as of the same time.

Majority of the brokerage firms, tracking the issue are positive on it and have suggested to subscribe to the issue. They see trong balance sheet, backing of 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.

IREDA is the premiere company in India focusing on financing projects for renewable sources of energy. India being one of the densest populated nations with 17 per cent of world population living in 2 per cent of available land area, is already facing a scenario of excessive pollution as a result of meeting its energy demands through fossil fuel burning, said Arihant Capital Markets.

"IREDA intends to use the funds for their existing projects underway as well as for future projects to be financed in the Renewable space. The listing is also aimed at improving the company’s brand image among its existing and potential customers. We are recommending 'subscribe for the long term' for this issue," it said.

IREDA mopped up Rs 643.26 crore from 58 anchor investors by allocating 20,10,19,726 shares at an issue price of Rs 32 apiece. BoB Capital Markets, IDBI Capital Market Services and SBI Capital Markets are the book-running lead managers to the IPO, while Link Intime has been appointed as the registrar.

At the upper end of the price band, the P/B translates to 1.19 times, said SMIFS. "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," it added with a subscribe rating for the issue.

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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