IREDA Share Price Dips 5% as Philip Capital Slaps ‘Sell’ Tag: Opportunity for Bottom Fishing?

The Indian Renewable Energy Development Agency (IREDA) Limited’s share price witnessed a significant decline of 5% in the early morning session on Tuesday, following a ‘sell’ tag given by the domestic brokerage firm Philip Capital. The PSU stock opened with a downside gap at ₹288.70 per share on the National Stock Exchange (NSE) and touched an intraday low of ₹273.15 per share within minutes of the opening bell. However, the stock experienced value buying at the lower level, paring some of its lost ground in the early morning session.

According to stock market experts, the weakness in IREDA’s share price can be attributed to the ‘sell’ tag given by Philip Capital. The brokerage firm had maintained its ‘sell’ tag on the PSU stock, predicting a deep downside in IREDA shares. Despite this, IREDA has delivered strong Q1FY25 results, and the stock has continuously risen for the last four sessions, leading to some profit-booking in the PSU stock. Interestingly, IREDA’s share price skyrocketed despite the brokerage giving the stock a ‘sell’ tag earlier.

IREDA Share Price Outlook

Avinash Gorakshkar, Head of Research at Profitmart Securities, attributed the decline in IREDA’s share price to the ‘sell’ tag given by Philip Capital, stating that the stock is correcting due to the brokerage’s prediction of a strong downside possibility. As the stock has continuously risen, profit-booking has triggered in IREDA shares. However, despite the ‘sell’ tag, IREDA shares have shown profit potential, with the stock delivering around 60% return to its shareholders in just one month, a promising sign for investors.

IREDA’s strong Q1 results 2024, which have beaten market estimates, should instill confidence in investors. The company’s sound balance sheet and the expected benefits from the Production Linked Incentive (PLI) Scheme in the upcoming Budget 2024 further reinforce this confidence.

IREDA Share Price Target

Sumeet Bagadia, Executive Director at Choice Broking, suggested that IREDA shareholders should hold the scrip with a strict stop loss at ₹270 for the near-term targets of ₹300 and ₹330. For fresh investors, Bagadia advised bottom fishing with a strict stop loss at ₹270 for short to medium-term targets of ₹300, ₹330, and ₹350.

Philip Capital’s Report

In its report on IREDA share price outlook (published on 14th July 2024), Philip Capital maintained its ‘sell’ rating on IREDA shares, raising the target price from ₹110 to ₹130. The brokerage firm noted that the recent stock rally is primarily driven by passive flows rather than fundamental factors and has already captured the best value. Although Philip Capital acknowledged IREDA’s continued growth, expecting strong loan growth at a Compound Annual Growth Rate (CAGR) of 25% over FY24-26 due to the country’s rising demand for renewable energy, they do not anticipate earnings growth keeping pace with loan growth due to pressure on margins.

Key Takeaways

• IREDA’s share price dipped 5% in the early morning session due to a ‘sell’ tag given by Philip Capital.
• The stock has delivered strong Q1FY25 results and has continuously risen for the last four sessions.
• Despite the ‘sell’ tag, IREDA shares have shown profit potential, with a 60% return to shareholders in one month.
• IREDA’s sound balance sheet and expected benefits from the PLI Scheme in the upcoming Budget 2024 reinforce investor confidence.
• Investors are advised to hold the scrip with a strict stop loss at ₹270 for near-term targets or consider bottom fishing with a strict stop loss at ₹270 for short to medium-term targets.

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Historical Context:

The Indian Renewable Energy Development Agency (IREDA) Limited is a public sector undertaking (PSU) that focuses on promoting and financing renewable energy projects in India. The agency was established in 1987 and has been playing a crucial role in the country’s transition to a low-carbon economy. IREDA has been actively involved in financing and implementing various renewable energy projects, including solar, wind, and hydroelectric power.

IREDA’s share price has been on a rising trend in recent times, driven by the growing demand for renewable energy in India. The company’s strong financial performance and its role in promoting sustainable energy have made it an attractive investment option for many investors.

The news article highlights the recent decline in IREDA’s share price, which was triggered by a ‘sell’ tag given by Philip Capital, a domestic brokerage firm. The brokerage firm had maintained its ‘sell’ tag on the PSU stock, predicting a deep downside in IREDA shares. However, IREDA has delivered strong Q1FY25 results, and the stock has continuously risen for the last four sessions, leading to some profit-booking in the PSU stock.

Summary in Bullet Points:

• IREDA’s share price dipped 5% in the early morning session due to a ‘sell’ tag given by Philip Capital.
• The stock has delivered strong Q1FY25 results and has continuously risen for the last four sessions.
• Despite the ‘sell’ tag, IREDA shares have shown profit potential, with a 60% return to shareholders in one month.
• IREDA’s sound balance sheet and expected benefits from the PLI Scheme in the upcoming Budget 2024 reinforce investor confidence.
• Investors are advised to hold the scrip with a strict stop loss at ₹270 for near-term targets or consider bottom fishing with a strict stop loss at ₹270 for short to medium-term targets.
• Philip Capital maintained its ‘sell’ rating on IREDA shares, raising the target price from ₹110 to ₹130, citing pressure on margins and a lack of earnings growth.
• IREDA’s strong loan growth is expected to continue, driven by the country’s rising demand for renewable energy.
• The company’s sound balance sheet and expected benefits from the PLI Scheme make it an attractive investment option for many investors.