IREDA SHARE: BUY, SELL OR HOLD AFTER GOVERNMENT'S NOD FOR 7% STAKE DILUTION?

IREDA Share: Shares of the state-run Indian Renewable Energy Development Agency (IREDA) zoomed 4.45 per cent on Thursday, September 19 to hit an intraday high of Rs 237.50 on both NSE and BSE. The surge in the PSU's share price came after the company announced Wednesday that it received approval from the Union government to raise Rs 4,500 crore through a Qualified Institutions Placement (QIP) of fresh equity.

However, as of the time of filing this report, it shares shed initial gains to trade at Rs 229.67 a share, still 1 per cent in green.

“Further to our intimation letter dated August 29, 2024 regarding the In-principle approval of the Board of Directors of IREDA for raising funds by way of equity capital for an amount aggregating upto Rs 4500 Crore in one or more tranches through Further Public Offer (FPO) / Qualified Institutional Placement (QIP) / Right Issue / Preferential Issue or any other permitted mode or a combination thereof,” IREDA said on Wednesday via an exchange filing.

The fundraise will result in a dilution of the government’s stake in IREDA by up to 7 per cent of the company’s post-issue paid-up equity, as a result of the fresh share issue. As of the quarter ended June 30, the Government of India holds 75 per cent stakes in IREDA.

Earlier, IREDA's board approved raising Rs 4,500 crore through any of the multiple avenues including an FPO or rights issue or preferential issue.

Now, the company informed the exchanges that the Department of Investment and Public Asset Management (DIPAM) gave the green light to go ahead with the share sale after receiving approval from a high-level government committee.

IREDA was set up in 1987 as a non-banking financial institution, it operates under the Ministry of New and Renewable Energy and promotes and develops projects related to renewable energy sources.

IREDA Stake Sale: What CMD Pradip Kumar Das said

Chairman and Managing Director Pradip Kumar Das, in an exclusive conversation with ET NOW, on Tuesday shared that IREDA has decided to infuse equity to the tune of Rs 4,500 crore to Rs 5,000 crore by this year's end. “For this, whatever natural dilution will happen, that will happen for Government of India.”

“Government of India is not going to sell any stake. Automatic stake dilution will happen. We have sought 10 per cent, we are waiting, maybe in couple of days we will be getting the approval,” Das said.

The IREDA CMD also noted that the state-owned company aims to achieve 'Maharatna' status by 2029. As of now IREDA is conferred with 'Navratna' status. Firms with Navratna status can undertake investments up to Rs 1,000 crore without central authority approval, allocate 30 per cent of net worth annually, and engage in joint ventures and overseas subsidiaries.

After getting 'Maharatna' status, IREDA can invest up to Rs 5,000 crore or 15 per cent of their net worth in a single project without requiring government approval. IREDA will also have the freedom to undertake mergers, acquisitions, and strategic investments both domestically and internationally, among other privileges.

IREDA Share: Should you BUY, SELL or HOLD?

A market expert and an ET NOW panellist has recommended to avoid making any fresh entry in IREDA shares.

The panellist said, during an episode of ET NOW Swadesh today, said, "IREDA is currently trading below all its short-term moving averages, and there is no momentum in the stock with very low volumes. Technically, it is not in the buy zone at the moment. You should consider entering only if it manages to cross the 20-day moving average at 235.5; otherwise, it should be avoided."

WATCH

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)

2024-09-19T08:36:37Z dg43tfdfdgfd