Green light for Ireda stock?

A warning sign The quarter-on-quarter rise in Ireda's gross stage 3 loans along with a fall in provision coverage ratio is a worry.

- Manish Joshi

The Indian Renewable Energy Development Agency Ltd (Ireda) stock fell by almost 7% after it announced the December quarter (Q3FY25) results. Though the net profit grew by 27% year-on-year to ₹425 crore, the drop in provision coverage ratio, both sequential and year-on-year, spooked investors. The ratio fell to 44.5% from 53% in the preceding quarter and 48.3% in the quarter a year ago. While the deterioration in the ratio is a worry, the negative reaction of the stock price got amplified because the street needed a reason to correct the premium valuation. Even after the fall, the stock trades at 3.8x of FY27 book value, as per the estimates of Phillip Capital, which is expensive given the below 2% RoA in FY27.