IREDA: 33% PAT growth & 35% revenue growth in H1-25 at a PE of 43
Guiding 34% AUM growth for FY24-30. Runway for growth is both long and steep. Valuations are not cheap and have priced in the future growth. Equity dilution is a concern with EPS lagging PAT growth
1. India’s largest pure-play green financing NBFC
ireda.in | NSE: IREDA
2. FY20-24: PAT CAGR of 55% & EPS CAGR of 17%
Dilution of equity base as seen from the EPS CAGR trailing PAT CAGR
3. Strong FY-24: PAT up 45% & Revenue up 43%
4. Strong Q2-25: PAT up 36% & Revenue up 38%
5. Strong H1-25: PAT up 33% & Revenue up 35%
6. Strong and improving return ratios
6. Outlook: AUM growth of 34% for FY24-30
Revenue from operations targets were declared in Aug-23 and hence the numbers look very conservative.
AUM growth to Rs 3,50,000 cr by FY30 from Rs 59,698 cr implies a CAGR of 34% for FY24-30
7. PAT growth of 33% & Revenue growth of 35% for Q1-25 at a PE of 43
8. So Wait and Watch
If I hold the stock then one may continue holding on to IREDA
IREDA has delivered a strong H1-24.
IREDA has a strong outlook with the management guiding for 30%+ AUM growth for FY24-30 and will provide opportunities over the long term.
IREDA will dilute the shareholders and this will impact the EPS growth. Impact of dilution is clearly seen in H1-25 where PAT grew by 33% and EPS grew by 13%. A one off dilution can be sustained given the strong business momentum and execution. However, a pattern of continued dilution of equity cannot be sustained over the long run. Dilution of equity could be a strong reason to exit in the short term.
9. Or, join the ride
If I am looking to enter IREDA then
IREDA has delivered a strong H1-25 with PAT growth of 33% & revenue growth of 35%. However EPS growth of 13% in H1-25 at PE of 43 makes the valuations quite rich in the short term.
IREDA had a net worth of Rs 9,336 cr as of Q2-25 end on a current market cap of Rs 61,386 cr. It is quoting at a price to book of 6.6 which makes it quite expensive in the short term.
The outlook for AUM growth of 34%+ for FY24-30 provides a very long runway for growth and provides opportunity in the stock only from a long term perspective.
At a PE of 43 and P/B of 6.6 the margin of safety is limited in IREDA, one not so strong quarter and the stock may start looking quite expensive.
Equity dilution is a cause of concern and if there are multiple equity infusions to fund growth then the long term share holder may not benefit from the opportunity in IREDA.
EPS CAGR of 17% for FY20-24 lags the PAT CAGR of 55%.
The trend continues in H1-25: EPS growth of 13% lags PAT growth of 33%
Previous coverage on IREDA
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