Synopsis:
IREDA shares fell 4.45% after Q1FY26 net profit plunged 51% QoQ due to legacy NPA recognition. Despite revenue growth and expanded lending, asset quality deteriorated, though tax-saving 54EC bond approval offers fundraising support.
The shares of the non-banking financial institution plummeted up to 6 percent in today’s trading session after the company’s net profit slumped by 51 percent QoQ and 37 percent YoY, respectively, in Q1FY26
With a market capitalization of Rs 45,650.01 crore, the shares of Indian Renewable Energy Development Agency Ltd were trading at Rs 162.50 per share, decreasing around 4.45 percent as compared to the previous closing price of Rs 169.65 apiece.
The shares of Indian Renewable Energy Development Agency Ltd have seen bearish movement after reporting mixed results in Q1FY26, revenue increased by 3 percent on a quarter-on-quarter basis from Rs. 1,904 crore in Q4FY25 to Rs. 1,947 crore in Q1FY26. Further, revenue zoomed by 29 percent year on year, from Rs 1,510 crore in Q1FY25 to Rs 1,947 crore in Q1FY26.
The company’s net profit decreased by 51 percent on a quarter-on-quarter basis, from Rs. 502 crore in Q4FY25 to Rs. 247 crore in Q1FY26. Further, net profit plummeted significantly by 36 percent year on year from Rs 384 crore in Q1FY25 to Rs 247 crore in Q1FY26.
IREDA’s asset quality showed improvement in FY23 and FY24, but Q1 FY25-26 witnessed a sharp rise in Gross NPA, jumping to ₹3,302 crore (4.13%) and net NPA to ₹1,615 crore (2.06%), reflecting one-off stress despite underlying portfolio stability. A major factor behind the deterioration in asset quality was the recognition of its loans to Gensol Engineering, which were close to Rs 730 crore, as NPA.
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Recently, the company received government approval to raise funds through 54EC capital gains bonds, becoming the sixth PSU allowed to do so after REC, PFC, NHAI, HUDCO, and IRFC. Funds raised must be used for renewable energy projects that can independently service their debt from project revenues, without state government support.
Investors can save long-term capital gains tax under Section 54EC of the Income Tax Act by investing up to Rs.50 lakh annually in 54EC bonds. Though these bonds offer a lower interest rate of 5.25% and have a five-year lock-in, they provide significant tax-exemption benefits on property sale gains.
IREDA supports a wide spectrum of renewable energy sectors, including traditional technologies like solar, wind, hydro, and waste-to-energy, as well as emerging fields such as green hydrogen, EV infrastructure, and fuel cells. It offers end-to-end financial solutions from project term loans and refinancing to securitization, top-up loans, and loan syndication, ensuring project viability from planning to execution.
IREDA is a government-owned enterprise operating under the Ministry of New and Renewable Energy (MNRE). IREDA specializes in promoting, developing, and offering financial assistance for new and renewable energy (RE) projects and energy efficiency and conservation (EEC) projects.
Written by Abhishek Singh
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