IREDA may raise up to Rs 15,000 crore via long-term bonds in FY23

Indian Renewable Energy Development Agency (IREDA) is looking to raise up to Rs 14,900 crore through long-term bonds in the current financial year for on-lending purposes.

The state-owned lender is also planning to raise Rs 500 crore through tier II bonds in FY23 to enhance its financial profile.

It has been able to raise funds at competitive costs, both in the international and domestic markets.

The average cost of funds stood at 6.1 per cent in FY22 compared to 6.7 per cent in FY21, supported by the softening of the systemic interest rates.

IREDA has a well-diversified borrowing profile, with access to funds through tax-free bonds, taxable bonds, bank/financial institution (FI) loans, masala bonds and foreign currency loans.

While providing funds to renewable energy (RE) projects, the government-owned entity works as the nodal agency to promote and implement policies and initiatives for the RE sector.

Rating agency ICRA has assigned “AA+” for the proposed issuance of long-term bonds. The agency revised its outlook on existing bonds from “stable” to “positive” on the improvement in credit profile with increased business volumes.

Non-performing assets (NPAs) declined to 5.2 per cent in March 2022 from 8.8 per cent in March 2021. Net NPAs also fell from 5.6 per cent to 3.2 per cent.

IREDA’s portfolio grew by 22 per cent in FY22 to Rs 33,931 crore as on March 31, 2022. This was due to the high disbursements of Rs 16,071 crore with a large share being short-tenure loans.

ICRA said its loan book carries a risk of high portfolio vulnerability, given the wholesale nature of exposures. It also keeps the concentration risk high for the company.

There has been substantial improvement in capital adequacy from 17.1 per cent in March 2021 to 21.2 per cent in March 2022.

The gearing (debt-to-equity) also declined from 8 times in FY21 to 5.2 times in FY22.

The Centre infused Rs 1,500-crore capital in March 2022, helping IREDA take higher exposures and to support its growth.

IREDA is planning an initial public offering (IPO) in the current financial year.