IREDA Shares Drop 35% from Record High: Should Investors Buy or Exit in 2024?

The Indian Renewable Energy Development Agency (IREDA) stock has witnessed a sharp 35% decline from its July 2024 highs, raising concerns among investors about its future.

IREDA Shares Drop 35% from Record High: Should Investors Buy or Exit in 2024?

IREDAs stock has moved down by 35% from the highs made in July 2024. It’s had investors cause for concern respecting where the share would be in the coming time. Analysts believe that careful behavior is needed and that the stock will struggle on ahead if it breaks below ₹200. Positive Q2 FY25 profitability with respect to the 36% increase in profit depositories and loan book growth do evidence the positivity lying underneath. The article analyses the way IREDA stock has performed its financial results and the recommendations by experts as well, advising investors whether they need to hold, buy, or exist this public sector stock.

Recent IREDA Stock Performance

Stock Performance of IREDA
These are some crucial aspects that help gain a premium valuation, which has improved financially for the company, with respect to the profitability in recent Q2 FY25.

The shares of IREDA opened at ₹209.70 on Tuesday and traded between a low of ₹198 and a high of ₹210 in the day. The stock closes at ₹199.50 at close of Tuesday, marked down 5% from the previous day closing price of ₹210.15. Investors are in a tight spot trying to decide if it is the time to buy or the trend would continue downward after such a stark correction from the July peak.

Ajit Mishra, Religare Broking remained cautious citing IREDA in the corrective phase. Said watch for stock around ₹200 levels which would be an important support point. If it breaks below ₹200 levels, then one could expect further fall to ₹190 or lower levels. On the upside, said ₹220 would be an important resistance point and if the stock closes above that level, then gains could be expected. He warned investors to watch out and strategize in line with market scenario and advice by experts.

Q2 FY25 Q Results

IREDA
The stock, however had a very roller-coaster ride during this quarter. IREDA’s July-September quarter FY25 was a great one: PAT more than doubled to ₹387.75 crore, up from ₹284.73 in the same period last year. The revenue from operations stood at ₹1,630.38 crore, a 38.52% rise from ₹1,176.96 crore YoY.

The growth of loan book stands at 35.88% in IREDA, that is ₹64,564.36 crore as compared to ₹47,514.48 crore in the comparable quarter of the previous fiscal. Sanctions of loans registered four-fold jump and reached ₹8,723.78 crore against ₹2,852.05 crore in the same quarter of the previous year. The loan disbursements have increased by 43.93% at ₹4,461.87 crore against ₹3,099.98 crore in the same quarter of the previous year. These figures point toward an upward growth trajectory of IREDA, backed by the government’s focus on renewable energy development in India.

Should you Buy, Hold or Sell IREDA Stock?

One should buy, hold, or sell IREDA stock? As we said in several instances, buying, holding, or selling IREDA stock is dependent on many factors, including how the overall market is doing, company financial health, and risk of the investor. Here are a few important considerations:

Support and Resistance Levels
It would break the ₹200 level, critical support. The stock could easily move to the ₹190 or even the ₹180 level if the stock collapses below this. Conversely, if the stock stabilizes and moves above the ₹220 resistance level, all highs are open for it. Investors need to be watchful of such technical levels in order to make the next decision.

Valuation Concern
Valuations have been a worrying factor of IREDA. While PSU stocks, especially in the defence space, have shown some resilience on the value front, it is tough for IREDA. This would have been one of the core reasons why the stock fell sharply from its peak seen in July. Investors would have to judge if the price being current could still be worth playing a gamble or still very overvalued against the current market condition.

Solid Financial Performance
While the stock has recently fallen, Q2 FY25 results on the financial front are still quite strong as they show good underlying fundamentals. Even though profits are up by 36%, it has logged sizeable growth in its loan book and sanctions. It, thus appears to be well positioned for long-term growth. Not to forget, any renewed thrust towards renewable energy from the Government of India would also further enhance business prospects for years ahead, making IREDA an attractive long-term investment proposition.

Market Sentiment and Volatility
IREDA is susceptible to market sentiment like equities. There has been a volatile nature attached to the broader market, and global economic scenario, interest rate, and inflation are at a fragile base. Hence, investors should be watchful and also keep updating themselves about the market scenario of the various sectors. The market Sentiment can change in a jiffy, and hence, stock price also of IREDA may become sensitive.

Sector Focus Headlined by Sectoral Growth in the Industry
Renewable energy is one of the focus areas for the Indian government and they had policy support to the sector. Therefore, as a public sector entity, IREDA would benefit from such positive policy developments. Long runway for growth is believed to be created in the renewable energy business by the country’s target for 2030 non-fossil fuel energy capacity. An organization, with such strategic roles in financing renewable projects, could be one of the big winners in the space, but investors need to be patient with that kind of structure and have to find a long-term view

Analyst Recommendations

Experts remain split on prospects for IREDA. Ajit Mishra advised with a word of caution, but others could view this correction as the time to buy for long-term investors. This sharp fall in stock may attract an ideal entry point for those who are willing to hold through short-term volatility. For the conservative investor, they can hold out for clearer signs of stability before committing more capital.

There are enough reasons for investors who want to exit to wait for the stock to move above the key resistance levels of ₹220 before taking a call. The sale at the time of correction may result in loss, but waiting for probable reversal would provide an effective exit.

Conclusion

The IREDA shares have lost 35% from highs touched in July, and investors await cues as to whether the street would turn positive about the stock’s future. The company has reported wonderful growth of 36% year over year in Q2 FY25 earnings and aggressive increases in loan sanctions and disbursals; however, valuation concerns and more volatility in the market continue to baffle the stock.
In IREDA, investors will keenly be focusing on the technical levels, specifically the level of support at ₹200 and resistance at ₹220. It is a very great time wherein long term prospects in the renewable energy market are very rich; short term restlessness is much more advisable rather than trying hard to ride it through. It is quite easy to decide to buy, hold, or exit the IREDA stock depending on the profile of risk undertaken by an individual and prevailing market conditions coupled with expert advice to tide over this correction phase.
However, it remains an important player in India’s renewable energy sector and may attract investors with the proper approach, though long-term value from this public sector stock will depend on patience and vigilance.
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Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

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