PSU NBFC Surges 10% After Being Accorded Navratna Status

Shares of Indian Renewable Energy Development Agency Ltd (IREDA) soared on Monday after the Department of Public Enterprises granted the company ‘navratna’ status late last week.

What Happened: IREDA, a public sector non-banking financial company, reported a 32% year-on-year increase in net profit at ₹337 crore for the January-March quarter, with profits holding steady compared to the previous quarter.

Asset quality also improved, with assets under management (AUM) growing by 26.8% year-on-year to ₹59,698 crore. This represents an 18% increase over the December quarter.

So far this year, IREDA’s shares have delivered a return of over 63%. The company made a strong stock market debut on November 29, 2023, with shares surging 87% from the issue price, marking it as one of the year’s most successful listings.

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IREDA, established in March 1987 and controlled by the Ministry of New and Renewable Energy (MNRE), supports electricity generation projects using new and renewable resources. The government holds a 75% stake in IREDA.

What does getting Navratna status mean for a PSU company?

The ‘navratna’ status allows top-tier public sector undertakings (PSUs) substantial financial autonomy, including making investments up to ₹1,000 crore without central government approval.

These firms can invest up to 30% of their net worth annually, as long as it remains under ₹1,000 crore, and can establish subsidiaries, form alliances, and enter into joint ventures abroad. To qualify, a company must already possess the ‘miniratna category I’ status and be listed under Schedule A of Central Public Sector Enterprises (CPSEs).

Share Price: IREDA shares were up 10.31% at ₹188.25 on Monday morning shortly after market open.

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