IREDA shares soar on attaining 'Navratna' status, stock up 500% from IPO price
Upstox
3 min read • Updated: April 29, 2024, 12:58 PM
Summary
By mid-day trade, the stock pared some of the gains and was valued ₹184 at 12:38 pm. The share value was around five times higher as compared to last year's IPO price of ₹32.
The shares of Indian Renewable Energy Development Agency Limited (IREDA), a non-banking financial company (NBFC) wholly-owned by the Centre, soared by up to 12% during the early trading hours on Monday, April 29.
The surge in the share value came in the first trading session after the company was accorded the 'Navratna' tag by the Finance Ministry. The categorisation was issued post the market closing hours on Friday, April 26.
In the first hour of today's trade, IREDA shares peaked to ₹192 apiece on the National Stock Exchange (NSE), up 12% as against the last closing price.
By mid-day trade, the stock pared some of the gains and was hovering around the ₹184-mark at 12:38 pm, higher by 7.8% as against the previous close. The stock value was around 500% higher as compared to IREDA's initial public offering (IPO) price of ₹32 per share.
Also Read: IREDA gets 'Navratna' status: What it means for the PSU, how it's achieved
The public sector undertaking (PSU), which is mainly involved in the financing of renewable energy projects, was listed on the bourses on November 29, 2023.
In the quarter ending March 31, 2024, the company logged a 32% year-on-year surge in net profit at ₹337 crore in Q4FY24. The assets under management (AUM) grew to ₹59,698 crore, up 37% from the year-ago quarter.
How the 'Navratna' status helps IREDA
With the Navratna status accorded to IREDA, the PSU is now free to make investments up to ₹1,000 crore in a fiscal year without prior approval from the central government. This autonomy is only extended to top-tier state-owned companies.
A PSU with the Navratna tag is allowed to invest up to 30% of its net worth within a financial year, provided that it does not cross the ceiling of ₹1,000 crore. Furthermore, the Navratna firms are also allowed to enter into joint ventures, forms pacts and set up subsidiaries offshore.
How the govt allots Navratna tag to PSUs
According to a government release, the Navratna tag is achieved by only those central public sector undertakings which have obtained "excellent" or "very good" rating under the Memorandum of Understanding system in three of the last five years.
They should also have a composite score of 60 or above in the six selected performance parameters, namely, net profit to net worth; manpower cost to total cost of production/services; profit before depreciation, interest and taxes to capital employed; profit before interest and taxes to turnover; earning per share; and inter-sectoral performance.