IREDA Shares Drop 6% After Q1 Profit Down 36% - Hold or Sell?

IREDA share price dropped by 6% to Rs 159 on July 11, 2025, after the company announced its Q1 results. The stock fell because investors were disappointed with the company's profit numbers, even though the business grew well in other areas.

IREDA Q1 Results: Mixed Performance

IREDA's results for Q1 2025 display a multi-faceted situation. The company registered a considerable drop in net profit of Rs 247 crore, which is down 35.7% from Rs 384 crore in the same period last year. However, the company recorded revenue growth of 29% to Rs 1,947 crore, which means its business is growing even if profits are negatively impacted. 

The office was not very happy about the decrease in profit and indicated the root cause: bad loans. Bad loans, or when companies have not repaid their loans, require banks to provide money with an allowance for loss. IREDA's bad loans, which increased from 2.45% in March 2025 to 4.13%, show that the banks required allocation money for loans. Gensol Engineering is the major concern, as Gensol Engineering owes IREDA Rs 470 crore and is in the process of bankruptcy.

Despite the disappointing profit, IREDA's business grew well in the Q1 2025. The loan book reached Rs 80,000 crore, which is a 26.5% growth year-on-year. Loans approved are also strong at Rs 11,740 crore, which is 28.5% higher than the previous year. The loans given to borrowers were Rs 6,981 crore, which shows 31.1% growth from the previous year.

IREDA Share Price Analysis

IREDA closed at Rs 159-161 on July 11, 2025, down 6% over the previous day. The stock reached a price of Rs 310 in July 2024 before declining sharply. The stock's lowest price this year was Rs 137 in March 2024. So far in 2025, IREDA's stock has declined by 20% and this shows how much of a challenge the company is experiencing. 

The company's valuation is currently Rs 47,532 crore. The stock currently trades at 4.47 times book value, and some analysts believe this premium is excessive. The company's PE is 27.44, which indicates that investors are still paying a premium for the stock even given recent challenges.

IREDA Share Price Target 2025

Different experts have different views on where IREDA's share price might go:

Analyst Predictions

Different experts have a range of opinions on IREDA's future share price. Conservative estimates suggest the stock might reach Rs 175-205, moderate estimates have a range of Rs 300-377, and optimistic estimates see the stock in the range of Rs 405-485. Wall Street analysts provide an average price target of Rs 219 and list the possible price targets as being between Rs 151-294.

Factors that Support Higher Prices

There are quite a few factors underpinning a move higher in prices for IREDA in 2025. Not only is the Indian government providing a lot of support behind the growth of renewable energy, but this also represents a growing opportunity for the company. With a growing market comes more companies looking for green energy loans; this is IREDA's core business. The growing strength of IREDA's business pipelines will be demonstrated by a very quick expansion of the loan book. To top it all off, even though IREDA is a financial institution, it has been designated as a Navratna company, which means offered special advantages as a government-owned company.

Risks to Consider

Investors need to be aware of certain risk factors. If bad loans do increase, the more companies that default could offset the public advantages of IREDA. Higher interest rates prevailing across the economy are costing IREDA in terms of borrowing costs, and there is also competition to worry about; there are other banks and financial companies now entering the green finance market.

Financial Comparison Table

*Approximate price from the same period last year

About IREDA

IREDA is short for Indian Renewable Energy Development Agency. IREDA is a government company that extends financing to solar, wind, and other clean energy projects. IREDA is a New Delhi-based company established in 1987 and is a "Navratna," a classification that allows the company more freedom of operation than a regular government company. Of all companies offering green energy financing, IREDA is the largest in India. IREDA operates within the Ministry of New and Renewable Energy. 

Recent IREDA news

During June of 2025, IREDA raised Rs 2,006 crore by selling shares to institutional investors, reflecting a strong institutional interest. IREDA is currently swell with requests, and many companies are viewing loans from IREDA as a viable option for financing renewable energy projects. The Indian government's plan to achieve 50% of electricity from renewable sources by 2030 has provided even further support for IREDA and its business.

IREDA does have sizeable problems, including Gensol Engineering, which owes IREDA Rs 470 crore and is in bankruptcy court. Rising rates throughout the economy present profit challenges for IREDA, as increased borrowing costs affect cash flows. There is now greater competition for IREDA, as even more banks and financial companies are entering the green finance industry.

Should You Buy IREDA Shares?

Reasons to Consider Buying

The renewable energy market is expanding rapidly and is the future of energy. IREDA enjoys the benefit of strong governmental backing and supportive policies. They are the market leader in green finance and have established relationships and experience. The share price is currently approximately 40% below its high point, which could represent some value in a long-term investment.

Reasons to Be Careful

Asset quality problems are growing, with bad loans increasing significantly over the past several months. Although revenues are going up, earnings are going down, which is a red flag to investors. The share price continues to trade at high valuations relative to its book value. The price of the shares has been very volatile, which is always a concern for short-term investors.

Expert Recommendations

Most analysts are suggesting a "hold" or "cautiously buy" rating on IREDA shares. They suggest looking for entry around Rs 175 levels with a target price of Rs 195 - 205 in the short term. Long term, a target of Rs 300 - 400 by the end of 2025 is suggested.

Future Outlook

IREDA's key near-term focus will be to improve asset quality and reduce bad loans. The company will continue to grow its loan book while working through the challenging Gensol Engineering loan.  The company will experience continued growth, but profit recovery will be more dependent on how the company is able to manage its bad loans. 

The company's revenue growth is expected to continue at some 20-25% shown by robust demand for financing based on the in-depth analysis of the debt market presented, and Gensol will just be managing energies over time. Profit recovery will be strongly influenced by the company's ability to manage bad loans taken and expenses. Despite growing competition, so far, IREDA is expected to remain the green finance market leader.

Looking forward to 2030 projections of India achieving 500 GW in renewable energy capacity, IREDA with immense opportunities. During this time frame, a time of growth in the green financing market could occur. With the support of the Indian government and its established position, IREDA has a hypotenuse advantage to grow with.

Conclusion

The quarterly results of IREDA present a mixed view. The company has been increasing its business volume rapidly and thus obtaining more clientele. However, a revenue drop due to the bad loan problem remains a concern. The move of an additional 6% drop in share price can show that investor sentiment towards the IREDA asset quality moves falls on the worrisome side for the current period. 

As noted, IREDA is best suited for the long-term investor who firmly believes in the potential future of India's renewable energy sector. In this condition, IRED is attractive at the present price, while short-term investors will want to sit back until there is more meaningful investor protection and better asset quality before making an investment decision on IREDA. The important pieces to note are how the company will handle its bad loan issue and whether or not it can return to some growth in profitability in the next several quarters. Overall, IREDA has established a strong market position, and with government support, this remains on the computer.

Disclaimer: This article is for educational purposes only. Please consult with a financial advisor before making investment decisions. Stock prices can go up or down, and past performance does not guarantee future results.

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