The Indian Renewable Energy Development Agency (IREDA) is a government-owned financial institution that plays a crucial role in promoting and facilitating the development of renewable energy projects in India. Established in 1987, IREDA provides financial assistance in the form of loans, equity, and other financial products to support various renewable energy initiatives, including solar, wind, hydro, and biomass projects.
Ireda’s share price has experienced a significant decline, falling from a record high of ₹310 to ₹227. Ireda shares are experiencing a decline due to three key scenarios. First, the Qualified Institutional Placement (QIP) is expected to be offered at a discount to the current market price, likely ranging from 5 to 7 percent. This discount may deter some investors and contribute to the downward pressure on the stock price.
Second, the government is planning to sell a 7 percent stake in Ireda. If this sale occurs in multiple tranches, it could create an overhang in the market, meaning that the sudden increase in available shares could further weigh on the stock price. Such a significant divestment may raise concerns among investors about the company’s stability and future prospects.
Lastly, the increase in free float resulting from these transactions will lead to greater supply in the market. With more shares available for trading, the excess supply can result in a price correction, as the increased number of shares could outstrip demand. This situation often leads to lower stock prices as investors adjust to the new market dynamics.