IREDA is India's largest dedicated green financing non-banking financial company (NBFC), with loan assets of ₹470.7 billion as of March 31, 2023.
As of March 31, 2023, their term loans outstanding reached ₹470,755.21 million, showing a CAGR of 30.00% since March 31, 2021. Geographically, they maintain a diversified asset base across 23 states and five Union Territories in India.
IREDA's secured term loans outstanding accounted for a substantial percentage of the total, ranging from 86.81% to 93.41%, providing a significant hedge against default.
IREDA's recognition in the industry is evident through the Mini Ratna (Category I) status conferred in June 2015 and the subsequent upgrade from Schedule B to Schedule A by the Department of Public Enterprises in September 2023.
The company has garnered a noteworthy clientele, including key players in the RE sector like ReNew Power Private Limited, Continuum MP Windfarm Development Private Energy, Ayana Renewable Power Private Limited, and others.
IREDA has seen an improvement in its Gross NPA, decreasing from 8.77% of term loans outstanding as of March 31, 2021, to 3.13% as of September 30, 2023. Similarly, their Net NPA has shown a positive trend, decreasing from 5.61% of net term loans outstanding as of March 31, 2021, to 1.65% as of September 30, 2023.
IREDA faces potential challenges in managing the quality of its expanding asset portfolio and controlling non-performing assets (NPAs). The company's business and financial performance may be negatively impacted if these aspects are not effectively handled.
Securing borrowings at commercially acceptable terms and competitive rates is crucial. Failure to do so could adversely affect IREDA's business, financial condition, and operational results.
The inherent risks associated with projects and schemes involving renewable energy sources, such as solar, wind, hydro, biomass, waste-to-energy, and emerging technologies, threaten IREDA's business, operational results, and financial condition if they materialize.
Regular inspections by the RBI could expose IREDA to penalties and restrictions if non-compliance or significant lapses are identified. Such instances may impact the company's business adversely.
Past downgrades in credit ratings raise concerns for IREDA. Any future downgrades could adversely affect the company's business, financial condition, and operational results.
Negative cash flows from operations in the past may recur in the future. There is no assurance against the recurrence of such negative cash flows.
Potential revisions regarding Power Purchase Agreements (PPAs) by certain DISCOMs and states could negatively affect the cash flows and financial conditions of IREDA's borrowers, impacting their repayment capabilities.
IREDA's business dependence on the Indian renewable energy sector, particularly within four sectors, leaves it vulnerable to challenges. Ineffective management of risks within these sectors could adversely affect IREDA's business and operations.
Concentration of loans to specific customers makes IREDA susceptible to the financial conditions of these customers. Deterioration in their financial status could materially and adversely affect the company's asset quality, financial condition, and operational results.
A significant portion of NPAs is concentrated in sectors like biomass, cogeneration, hydro, and wind power. Further increases in NPAs within these sectors may adversely affect IREDA's business, financial condition, and operational results.
An increase in contingent liabilities could adversely impact IREDA's business, operational results, and financial condition.
The 50 MW solar project in Kerala, subject to tariff changes by the Kerala State Electricity Regulatory Commission, may adversely affect its viability. Revenue from the project has decreased from ₹ 284.90 million in 2022 to ₹ 269.04 million in 2023.
A concentration of loans in specific states, especially the top five states, exposes IREDA to economic downturns, natural disasters, or regulatory changes, potentially leading to increased defaults by borrowers in those states.
Outstanding litigations involving IREDA could adversely impact the company's business, operational results, and financial condition.