IREDA shares fall 5% after asset quality deteriorates, stressed assets increase in Q1

Shares of Indian Renewable Energy Development Agency Ltd. (IREDA) fell as much as 5% in reaction to their June quarter results on Friday, July 11. The results were reported after market hours on Thursday.

The major talking point in IREDA’s results has been the deterioration in asset quality on a sequential basis.

IREDA’s gross NPA worsened to 4.13% in the June quarter, compared to 2.45% in March, while Net NPAs also deteriorated to 2.06% from 1.35%.
A major factor behind the deterioration in asset quality was the recognition of its loans to Gensol Engineering which were close to ₹730 crore, as NPA.
The other major contributor was the shift of a borrower from being a Stage II asset into an NPA, which also had an exposure of ₹783 crore.

IREDA’s stage 3 assets increased by 77% from the previous quarter to ₹3,302 crore.

Net profit for the quarter declined by 35% from last year to ₹247 crore. When compared to the March quarter, the net profit halved.

Provisions for the quarter increased by over 180% on a quarter-on-quarter basis to ₹363 crore, from ₹129 crore during the March quarter.

On the positives, IREDA’s Net Interest Income increased by 36% from last year, although it declined by close to 9% on a sequential basis.

Shares of IREDA are currently trading 4% lower at ₹162.81. The stock is down over 40% from its all-time high of ₹310.