IREDA Q1 FY26 Results: Share Price Falls as Profit Declines 36%, But Loan Book Hits ₹79,941 Cr
Indian Renewable Energy Development Agency (IREDA) witnessed a sharp 4% fall in its share price on July 11, 2025, closing at ₹162.72 on the NSE. This came right after the state-run financier reported a substantial 35.65% drop in its consolidated net profit for Q1 FY26, which stood at ₹246.88 crore compared to ₹383.7 crore in the same quarter last fiscal.
While the fall in net profit may raise concerns among investors, the company's strong revenue growth and expansion in its loan portfolio point toward long-term stability and strategic direction.
📉 Why Did IREDA Share Price Fall?
The IREDA share price reacted negatively to the lower-than-expected earnings. The primary reasons for the 36% YoY decline in net profit were:
- Higher expenses: Total expenses surged 59.9% to ₹1,655 crore from ₹1,035 crore a year ago.
- Financing costs rose to ₹1,218 crore
- Impairment on financial instruments shot up to ₹363 crore from a gain of ₹30 crore YoY.
- Gross NPA worsened to 4.13% in Q1 FY26 from 2.45% in Q4 FY25.
This spike in costs and asset quality concerns significantly impacted investor sentiment, causing the stock to dip intraday by 4%.
📊 Revenue Growth Paints a Stronger Picture
Despite the profit slump, IREDA posted a 29% increase in total revenue from operations, which grew to ₹1,947.6 crore in Q1 FY26, up from ₹1,510.27 crore in Q1 FY25. This growth indicates the firm’s rising capacity to generate interest income from its expanding loan base.
Net Interest Income (NII) also increased by 36% YoY to ₹691 crore from ₹508 crore, reflecting the company’s improving core lending operations.
💼 Loan Book Expansion: Long-Term Confidence
One of the standout figures in IREDA’s Q1 FY26 performance is the continued rise in its loan portfolio. The company reported a 27% increase in its loan book to ₹79,941 crore as of June 30, 2025, compared to ₹63,207 crore in the previous year.
Additionally, loan sanctions grew 29% to ₹11,740 crore from ₹9,136 crore YoY, and loan disbursements rose 31% to ₹6,981 crore from ₹5,326 crore in Q1 FY25.
These metrics show that IREDA continues to be an active lender in the renewable energy sector, aligning with the Indian government’s green energy mission.
⚠️ Deterioration in Asset Quality
While growth in revenue and lending activity is commendable, a sharp rise in NPAs is a concerning signal. IREDA’s Gross NPA ratio jumped to 4.13% in Q1 FY26 from 2.45% in Q4 FY25, and Net NPA rose to 2.06% from 1.35% sequentially.
High impairments on financial instruments and rising NPAs suggest increased credit risk, which needs to be managed efficiently in the coming quarters to maintain investor confidence.
📢 Tax-Saving Opportunity: 54EC Bonds Notification
In a significant development ahead of its results, IREDA was authorized by the Ministry of Finance to issue capital gain exemption bonds under Section 54EC of the Income Tax Act. This means investors earning long-term capital gains can invest in IREDA’s bonds to claim tax exemption.
These bonds join the list of eligible 54EC instruments such as REC, PFC, and IRFC, and are expected to draw strong demand from retail and HNI investors seeking tax-saving avenues with relatively stable returns.
📈 IREDA Share Price Outlook: What Should Investors Do?
With a 4% drop post-earnings, many retail investors are wondering if this is a buying opportunity or a sign of deeper issues. Here’s a brief outlook:
- Short-Term: Pressure may continue due to asset quality concerns and rising impairment costs.
- Medium to Long-Term: The consistent growth in revenue, loan sanctions, and the company’s alignment with India’s renewable energy goals give long-term upside potential.
- Valuation: Even after the correction, the stock remains significantly higher YoY. The ₹160–₹165 range may act as short-term support.
📌 About IREDA: A Strategic Green Finance Player
IREDA is a non-banking financial institution under the Ministry of New and Renewable Energy (MNRE), providing innovative financial products and services to promote, develop, and extend financial support for renewable energy and energy efficiency projects across India.
With India targeting 500 GW of non-fossil fuel capacity by 2030, IREDA’s role is critical in bridging the funding gap for solar, wind, hydro, and biomass projects.
🔍 Final Thoughts
While the Q1 FY26 earnings were below expectations due to higher expenses and deteriorating asset quality, IREDA’s long-term growth remains intact with a healthy loan pipeline and government-backed initiatives. Investors should monitor future quarters for improvement in NPAs and efficiency ratios before making major investment decisions.
IREDA share price may face near-term volatility, but its strategic importance in India’s energy transition story makes it a stock to watch closely.
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