ICICI Direct expects strong upside in IREDA; Here’s Why

Synopsis:- The NBFC offers 27% upside with a ₹180 target, supported by 27–28% AUM CAGR, improving asset quality, and credit costs of 50–60 bps. A diversified ₹87,975 crore loan book across 23 states, strong solar and wind exposure, and India’s push toward 500 GW renewable capacity by FY30 drive long-term optimism.

India’s financial institutions sector drives economic growth with robust balance sheets in FY2025. Scheduled commercial banks saw deposits reach  Rs 232 lakh crore and domestic credit hit  Rs 181 lakh crore, both nearly tripling since 2015, while gross NPAs fell to a multi-decadal low of 2.2%. NBFCs expanded credit at 13-15%, bolstering retail lending amid double-digit banking growth of 11.4%. Profitability strengthened with RoA at 1.4%.

With a market capitalisation of Rs 39,273.05 crore, the shares of Indian Renewable Energy Development Agency Ltd were trading at Rs 139.80 per share, decreasing around 1.20 percent as compared to the previous closing price of Rs 141.50 apiece.

Brokerage Recommendation

ICICI Direct’s ‘Buy’ call signals confidence in the NBFC stock’s medium-term prospects. With a target price of  Rs 180, the brokerage expects a 27% upside from the current  Rs 139.90 level, reflecting optimism around business traction, earnings visibility, and sector tailwinds despite recent market volatility.

As per the brokerage, the Indian Renewable Energy Development Agency is witnessing sustained growth momentum, supported by its dominant position in renewable financing. AUM is expected to grow at 27–28% CAGR during FY26–28E, aided by strong loan demand, stable spreads, operating leverage, and a healthy profitability profile with RoA of ~1.8–2%.

The brokerage highlighted improving asset quality trends, with GNPA declining by ~22 bps sequentially in Q3FY26 and slippages remaining under control. Conservative provisioning, a maturing loan book, and better recoveries are likely to keep credit costs contained at ~50–60 bps over FY26–28E, supporting earnings stability and predictable returns.

Structurally, the brokerage sees a long growth runway as India scales renewable capacity from ~254 GW to 500 GW by FY30. IREDA’s nodal-agency role, exposure to new segments like green hydrogen, energy storage, and EV infrastructure, and AAA domestic rating with low-cost funding access strengthen its long-term return profile.

Financials

IREDA delivered a strong Q3 FY26 performance, with revenue rising 25% YoY to  Rs 2,130 crore and 3.5% QoQ, reflecting sustained credit demand across clean energy segments. Profitability also strengthened, as PAT jumped 38% YoY to  Rs 585 crore, despite higher costs, reinforcing its role in financing India’s energy transition.

Indian Renewable Energy Development Agency, loan sanctions rose 29% YoY to  Rs 40,100 crore, and disbursements jumped 44% YoY to  Rs 24,903 crore in 9MFY26. Outstanding loans stood at  Rs 87,975 crore, led by solar (25%) and wind (12%), with private sector exposure at 71%, reflecting diversified and accelerating clean-energy financing.

Indian Renewable Energy Development Agency has a well-diversified loan book with a PAN-India presence across 23 states and 4 UTs. As of December 2025, outstanding loans of  Rs 87,975 crore are spread across key states like Rajasthan (16%), Andhra Pradesh (11.5%), Karnataka (11.3%), Telangana (10.6%), and Tamil Nadu (10%), reducing concentration risk and supporting stable long-term growth.

Indian Renewable Energy Development Agency is a government-backed financial institution focused on funding India’s clean energy transition. It provides loans for solar, wind, hydro, and emerging green technologies, playing a critical role in scaling renewable capacity while supporting sustainable infrastructure development across the country.

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