IREDA IPO review

IREDA is a Public Sector NBFC designated as a IFC (Infrastructure Finance Company) by RBI.

It is one of the several Government power sector financiers, others being PFC and REC. IREDA specialises in the financing of renewable power sector. Renewable power sector is showing fast paced growth in India, and investing in IREDA can be a good proxy to take exposure in the renewable power sector.

Finance companies are valued by the markets at a Price to Book value of 1, unless there is a significant reason to value at a premium. IREDA IPO is also priced at an approximate Price to Book ratio of 1, which is neither cheap nor expensive. 

Renewable power projects such as Solar and wind power projects are highly sensitive to finance costs for viability. Good projects can especially drive down Net interest margins for financiers. Therefore the revenue growth for IREDA is expected to come mostly from increase in overall loan book, rather than increase in margins.

Since the IPO is available at a reasonable valuation, investors may look to "APPLY" to this IPO