IREDA IPO's grey market premium doubles; what to expect from listing?

Shares of Indian Renewable Energy Development Agency (IREDA) is set to make its Dalal Street debut on Wednesday, November 30, 2023. The PSU miniratna is expected to deliver a strong listing pop on debut if one goes by the signals by the grey market premium it is commanding.

Last heard, shares of IREDA were commanding a premium of 12 per share in the grey market, suggesting a listing pop of 38 per cent for the investors. However, its grey market premium has doubled in the last few days, particularly when its price band was announced publicly.

Analysts are also expecting a performance at debut IREDA. They see the PSU player to reward investors on the back of its sound fundamentals, growth opportunities in various sectors, government push on sustainable energy goals and robust interest from investors across all the categories.

With IREDA IPO receiving a healthy subscription of about 39 times, we expect the IPO to list at a premium of around 35 per cent to the issue price of Rs. 32 per share considering power-financing NBFCs are expected to continue this growth momentum said Shreyansh Shah, Research Analyst at StoxBox.

"It has the best asset quality amongst peers, with its GNPA ratio at 3.13 per cent at the end of September 2023. The non-deposit lender will utilise the net proceeds of the issue to augment its Tier-I capital base; thereby enhancing its capital adequacy and leading to a stable leverage position," he added suggesting investors to hold the shares for a medium to long-term perspective.

IREDA sold its IPO in the range of Rs 30-32 apiece with a lot size of 460 shares, which was open for bidding between November 21 and November 23. The state-run PSU player raised a total of Rs 2,150.21 crore via IPO route, which included a fresh share sale of Rs 1,290.13 crore and an offer-for-sale (OFS) of 26,87,76,471 equity shares.

Mehta Equities predicts a likely 25 per cent or more listing gain against the issue price of Rs 32, citing IREDA's leading role in renewable energy financing and potential Navratna company upgrade. The NBFCs financial autonomy is expected to boost its competitive edge.

IREDA is poised to make history with its upcoming mainboard IPO, drawing significant attention despite being fully priced said Prashanth Tapse, Senior VP (Research), Mehta Equities. "Short-term investors are advised to consider booking profits above the expected gain, while long-term investors are encouraged to hold for future potential," he said.

The issue was overall subscribed a strong 38.80 times during the three-day bidding process. The portion for qualified institutional bidders (QIBs) was subscribed a whopping 104.57 times, while the portion reserved for non-institutional investors saw 24.16 times bidding. The allocation reserved for retail investors and employees was subscribed 5.09 times and 7.73 times, respectively.

Shivani Nyati, Head of Wealth, Swastika Investmart said that IREDA's IPO was priced fairly, reflecting the company's strong fundamentals and growth potential. Therefore, the IREDA IPO is likely to generate decent listing gains.

IDBI Capital Markets, BoB Capital Markets and SBI Capital Markets are the book running lead managers to the issue, while Link Intime India is the registrar for the issue. Shares of IREDA will be listed on both BSE and NSE on Thursday, November 29.
 

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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