Shares of Indian Renewable Energy Development Agency (IREDA) plunged 3.75% to Rs 124.5 after the National Stock Exchange (NSE) revoked its inclusion in several key indices.
This decision comes just days before IREDA's scheduled inclusion on 28 March 2024.The reason for the reversal is IREDA's non-compliance with SEBI portfolio concentration norms for Exchange Traded Funds (ETFs) and Index Funds. According to the NSE's official statement, the Index Maintenance Subcommittee (Equity) had initially greenlit IREDA's inclusion in February. However, upon further review, a violation of SEBI's portfolio concentration norms was identified, leading to the revocation.
This unexpected development means IREDA will no longer be included in indices like Nifty 500, Nifty Midcap 150, and Nifty 200, among others. Companies initially excluded to make way for IREDA, such as V-Guard Industries, will retain their spots in the relevant indices.
The news triggered a sell-off in IREDA's stock, leading to the 4% decline. This comes on top of a recent downward trend, with the stock price currently down 41.42% from its peak of Rs 215 hit in February 2024. The decline is attributed to profit booking after a significant initial surge following the company's debut on Dalal Street.
The scrip entered the stock exchanges on 29 November 2023. It was listed at Rs 50, exhibiting a premium of 56.25% over the issue price of Rs 32. On that day, it settled at Rs 59.99, a premium of 87.47% over the issue price.
IREDA is a wholly owned Government of India (GoI) enterprise under the administrative control of the Ministry of New and Renewable Energy (the MNRE). It is also conferred with the Mini Ratna (Category-I) status. As on December 2023, GoI held 75% stake in IREDA
IREDA's net profit surged 67.14% to Rs 335.54 crore on 44.2% increase in total income to Rs 1253.20 crore in Q3 December 2023 over Q3 December 2022. Profit before tax soared 64.5% YoY to Rs 386.14 crore in Q3 December 2023.
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