Shares of Indian Renewable Energy Development Agency Ltd (IREDA) have been on an impressive run over the last few months. After hitting an all-time low of Rs 49.99 on November 29th last year, the stock has seen a meteoric 253% rise to end at Rs 176.45 last Friday. This green energy PSU has made a remarkable comeback in just over 3 months.
What Triggered This Stellar Rally?
While IREDA had been underperforming for most of last year, a few key events over the last few months changed market sentiment. Firstly, BSE and NSE revising the circuit filter limit upwards to 20% from 5% allowed more flexibility in stock price movement. This led to a 14.39% intraday gain on the very next trading session.
Secondly, their latest December quarter results showed strong growth on all fronts – 67% higher net profit, 44% revenue growth and 33% loan book expansion. Reduction in NPAs also indicated an improvement in asset quality. With the company firing on all cylinders, investors lapped up the IREDA stock.
But this smart surge, IREDA shares are still 18% below their record peak of Rs 215 hit in February 2024. So does the stock have more steam left?
What Technical Analysts Are Saying
According to Riyank Arora from Mehta Equities, IREDA stock has crossed a resistance at Rs 157. So further upside towards Rs 180-185 looks likely. However, he sees a pullback to Rs 138-140 in the near term as a healthy entry point for fresh buyers.
Shiju Koothupalakkal from Prabhudas Lilladher also remains bullish with targets of Rs 174 and Rs 192. But Rs 140 remains a crucial support to watch out for in case of any corrective decline. A close below this could negate the positive trend.
On the flip side, Abhijeet from Tips2Trade believes the uptrend looks exhausted as Rs 162 remains a strong resistance. He sees a likely correction towards Rs 122 if Rs 146 support fails to hold.
Road Ahead for IREDA
India’s target is 50% energy from non-fossil sources by 2030, renewable energy companies have a huge growth runway ahead. IREDA can be a great place to multiple the capital revenue. Their Q3 results already reflect the positive business momentum.
However, competition is also rising in this space with more banks/NBFCs focusing on funding green energy projects. So IREDA has to ensure execution remains top-notch – maintain asset quality, diversify its loan book and improve operational efficiency further.
Most analysts remain optimistic about IREDA’s medium to long term growth outlook. However, some volatility in the near term is expected as the stock digests recent gains. For investors who missed catching this PSU turnaround story earlier, any dips towards the Rs 138-146 band could offer an attractive buying opportunity.