IREDA is an NBFC company that comes under the Ministry of New and Renewable Energy. It is in the field of infrastructure finance. The company has worked in renewable energy for the past 36 years. The company has been growing in the last few years. Focus on renewable energy in the last few years has helped the company.
It has around 30% market share in renewable financing. The company has Assets Under Management of more than Rs 47,000 crore. By 2030, around Rs 30 lakh crore investment would be needed in the sector. Out of this, almost 75% (around Rs 22.5 lakh crore) would be raised through debt and half of that would come from NBFCs. So, if the company maintains its share of 30%, this would make it around Rs 4 lakh crore. So, it is possible that the company’s AUM can grow from Rs 50,000 crore to Rs 4 lakh crore by 2030. This implies 8 times growth in the next 6 years. However, there are a lot of ifs and buts in the growth. Competition might derail the train or growth of the renewable sector may take a hit. All this can be a concern.
Although there are other players like PFC, IRCF that are in similar business. But the point is that this company is pure-play renewable energy finance while they have very few companies that are more diverse so their exposure to renewable energy is lower.
One major risk from the company is NPA concerns if discoms are unable to pay on time. We all know the tough situations of discoms and the whole power sector in the country. State utilities account for 24% of the asset mix.
Also, this is quite an attractive space. So if more players enter the renewable energy financing space then the company may face pressure on AUM growth as well as margins.
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