IREDA Shares Rocket 9% To New All-Time High After Q1-Print, But Brokerage Sees Over 50% Downside Ahead

IREDA‘s share price rocketed on Monday morning, going up over 9% to hit a new all-time high of ₹310.

What Happened: The company posted its results for the quarter ended June last week. IREDA reported a 30% year-over-year increase in net profit to ₹383 crore.

Revenue grew 32% to ₹1,501 crore. Net interest income, the difference between a bank’s income from lending activities and interest paid to depositors, came in at ₹508 crore, up 37.6%. Net interest margin for the June quarter stood at 3.3%, slightly lower than the 3.4% posted in the March quarter.

Brokerage Views: Phillip Capital maintained its “sell” rating for the stock but raised its target price to ₹130 from ₹110. The revised target indicates around 54% downside from the stock’s last closing price of ₹284.

See Also: IREDA Chairman Sees Salary Jump 40% In FY24

The brokerage firm said that IREDA will see strong loan growth at a compound annual growth rate of 25% over FY24-26 backed by the rising demand for renewable energy in the country. “However the earnings growth is not expected to match the loan growth due to pressure on margins,” the analysts added.

The brokerage firm added that the company’s net interest income came in lower than its estimates due to the decline in net interest margins. “The recent rally in the stock is driven by passive flows rather than any major fundamental reason. We believe the best is already priced into the stock,” the analysts added.

Price Action: IREDA’s share price was up 5.15% to trade at ₹298.91 as the markets opened on Monday.

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