IREDA: 31% PAT growth & 35% revenue growth in 9M-25 at a PE of 35
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. Q3-25: PAT up 27% & Revenue up 36%
5. 9M-25: PAT up 31% & 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 31% & Revenue growth of 35% for 9M-25 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 9M-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. 9M-25 loan book growth of 36% indicates IREDA is on-track to deliver as per the guided AUM growth.
IREDA will dilute the shareholders and this will impact the EPS growth. Impact of dilution is clearly seen in 9M-25 where PAT grew by 33% and EPS grew by 14%. 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 in absolute terms.
9. Buy?
If I am looking to enter IREDA then
IREDA has delivered a strong 9M-25 with PAT growth of 33% & revenue growth of 35%. at PE of 35 makes the valuations reasonable in the short term.
However 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 17% for FY20-24 lags the PAT CAGR of 55%.
The trend continues in 9M-25: EPS growth of 14% lags PAT growth of 31%
A 14% EPS growth for a PE of 35 makes the valuations quite expensive.
IREDA had a net worth of Rs 9,842 cr as of Q3-25 end on a current market cap of Rs 53,728 cr. It is quoting at a price to book of 5.5 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 35 and P/B of 5.5 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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