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IREDA Share Big News- FPO worth Rs 4500cr | IREDA FPO News
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Ireda's Big Move: Raising Rs 4,500 Crore for Green Energy
Ireda Share has a big News, this public sector non-banking financial company (NBFC), is all set to raise a massive Rs 4,500 crore through a Follow-on Public Offering (FPO). This big news impacted IREDA share price today by hitting 10% upper circuit.
This important decision will be made official in a board meeting on August 29, 2024 where FPO details will be made public officially.
Now, what is next for IREDA, shareholders and what IREDA will do of this massive FPO amount? Let's find out in this blog.
Why is Ireda Raising Funds?
Ireda has plans for the Rs 4,500 crore FPO funds as follows:
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Green Projects Financing: Backing large renewable projects such as wind power, solar energy and hydropower.
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Increasing Loan Disbursals: Increasing loan disbursals to more than Rs 30,000 crores for green energy initiatives.
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Strengthening Finances: Improving financial health and ability to raise more debt.
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Supporting Government Initiatives: Aligning with renewable energy policies and targets.
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Adopting New Technologies: Investing in advanced technologies that will improve energy efficiency.
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Expanding Operations: Expanding operational capacity and infrastructure development
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Issuing Capital Gains Bonds: May issue tax-free bonds under Section 54EC.
A Brief Look at Ireda's Journey
In December 2023, Ireda made its entry into Dalal Street, having tried and failed twice in the last ten years. Through this period of difficulty, it has managed to become the only PSU NBFC purely concentrated on environmental energy that’s been listed publicly. This particular status has helped it find a space for itself within the finance industry where no other firm operates; and today with an FPO coming up soon they want more than ever before to solidify their position.
What's Next for Ireda?
In 2023-24, Ireda’s loans crossed Rs 25,089 crore and exceed Rs 30,000 in the financial year; if so they would be reaching new heights. This April 2024, having this in mind the board approved a borrowing plan of Rs 24,200 cr that includes raising funds through bonds (perpetual debt instrument), term loans and external commercial borrowings among other channels.
Another proposal being pushed by IREDA is inclusion into Capital Gains Exemption bond under Section 54EC of Income Tax Act’1961 which could give them tremendous benefits. If successful then it can put them at par with PFC Ltd or REC Ltd who are leading their way up in energy sector now like never before!
What does this mean for Shareholders
Ireda’s Rs 4,500 crore FPO will have several impacts on shareholders:
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Shareholding Dilution: Right to ownership for existing shareholders may go down if they do not purchase FPO shares.
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Long-term Growth Potential: This money will support environmental projects which can multiply Ireda’s income and long term worth per share.
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Stock Price Impact: Prices of shares over a short period depend on how the market responds to FPOs.
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Increased Liquidity: Buying and selling could become simpler due to many more shares being available in the market.
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Strategic Positioning: The fact that IrDA focuses on renewable sources of energy might bring wider range of investors thus increasing their stock value.
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Dividend Potential: Expansion-driven profit increments could result into higher dividends paid out by the company
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Institutional interest: Some institutional investors might be attracted by this F.P.O thereby probably having an effect on stabilization of prices for stocks at IREDA level
Overall, while there may be short-term dilution, the FPO could position Ireda for significant long-term growth.
Conclusion:
Having increased its net worth to Rs 8,559.43 crore as of March 31, 2024 and recently setting up a subsidiary company in Gift City, Gujarat; Ireda is now certainly headed for becoming one among the leading players within the green energy sector.
This FPO isn’t just about raising money; it’s about powering India’s future with renewable resources. As the planet moves towards sustainable power sources like never before so too does IREDA position itself as an essential player in this worldwide shift towards cleaner energy?
Disclaimer: This Blog is for information purposes only and doesn’t advise any reader to make any type of investment. Always consult your Financial Consultant before investing.
Frequently Asked Questions
Ireda's Follow-on Public Offering (FPO) is a way for the company to raise additional funds by offering new shares to the public. This Rs 4,500 crore will be used to support various green energy projects and enhance Ireda's financial strength.
Ireda plans to use the funds to finance large renewable energy projects, increase loan disbursals for green initiatives, strengthen its financial position, and support government policies on renewable energy.
Existing shareholders may see a dilution in their ownership if they do not purchase the new shares. However, the FPO is expected to support long-term growth, potentially increasing the value of their shares over time.
The FPO will provide Ireda with the capital needed to expand its operations, invest in new technologies, and improve its financial health, positioning the company for future growth in the green energy sector.
The stock price could experience short-term fluctuations based on market reactions to the FPO. However, the long-term outlook is positive, as the funds raised will be used to drive growth in the renewable energy sector, potentially boosting the stock's value.
