IREDA FY25: PAT & Revenue Up 36%, Valuation Stays Rich
IREDA targets 36% AUM CAGR till FY30, but steep valuations, lagging EPS, equity dilution, and asset quality risks raise concerns. Long-term tailwinds priced in.
1. India’s largest pure-play green financing NBFC
ireda.in | NSE: IREDA
2. FY21-25: PAT CAGR of 49% & EPS CAGR of 26%
Dilution of equity base as seen from the the 9% EPS CAGR trailing PAT CAGR
3. Strong FY-24: PAT up 45% & Revenue up 43%
4. Q4-25: PAT up 49% & Revenue up 38% YoY
PAT up 18% & Revenue up 13% QoQ
5. FY-25: PAT up 36% & Revenue up 36%
6. Strong and improving return ratios
6. Outlook: AUM growth of 36% for FY25-30
AUM growth to Rs 3,50,000 cr by FY30 from Rs 76,250 cr in FY25 implies a CAGR of 36% for FY25-30
7. PAT growth of 36% & Revenue growth of 36% for FY25 at a PE of 35
8. Hold?
If I hold the stock then one may continue holding on to IREDA
IREDA has delivered a strong FY25 far ahead of the targets set for itself.
IREDA has a strong outlook with the management guiding for 36% AUM growth for FY25-30 and will provide opportunities over the long term. FY25 loan book growth of 28% indicates IREDA is on-track to deliver as per the guided AUM growth.
The outstanding loan book also expanded by 28%, reaching ₹76,250 crore as of March 31, 2025, up from ₹59,698 crore in the previous year.
IREDA will dilute the shareholders and this will impact the EPS growth. Impact of dilution is clearly seen in FY25 where PAT grew by 36% and EPS grew by 22%. 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.
One needs to keep a close watch on the asset quality as both Gross & Net NPA has increased as of FY25 end compared to FY24 end.
FY25: Gross Non Performing Assets Ratio = 2.45%
FY25: Net Non Performing Assets Ratio = 1.35%
9. Buy?
If I am looking to enter IREDA then
IREDA has delivered a strong FY25 with PAT growth of 36% & revenue growth of 36%. at PE of 27 makes the valuations fully priced in the short term.
PAT is not the right way to look at valuations given equity dilutions. 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 9% for FY21-25 lags the PAT CAGR of 49%.
The trend continues in FY25: EPS growth of 22% lags PAT growth of 36%
A 22% EPS growth for a PE of 27 makes the valuations slightly expensive.
IREDA had a net worth of Rs 10,266.54 cr as of FY25 end on a current market cap of Rs 44,927 cr. It is quoting at a price to book of 4.4 which makes it quite expensive in the short term.
The outlook for AUM growth of 36%+ for FY25-30 provides a very long runway for growth and provides opportunity in the stock only from a long term perspective.
While Government-linked NBFC, lowers credit risk perception however a PE of 27 is expensive for an NBFC unless growth is sustained. At a PE of 27 and P/B of 4.4 the margin of safety is limited in IREDA, one not so strong quarter and the stock may start looking quite expensive.
Previous coverage on IREDA
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