Author: Aarya Shah | EQMint | Market News
The Indian Renewable Energy Development Agency (IREDA) has delivered a strong financial performance in the second quarter of FY26, reinforcing its leadership role in financing India’s clean energy transition. The company reported a net profit of ₹549.33 crore, a 41.7% year-on-year increase, as growth in lending and interest income powered results.
This marks one of IREDA’s best quarters since its listing, signaling both the rising momentum in India’s renewable energy financing landscape and the company’s operational resilience in a high-demand sector.
Robust Income Growth
The company’s Net Interest Income (NII) surged by nearly 49.5% to approximately ₹817 crore in Q2 FY26, compared to ₹547 crore in the same period last year. The strong growth was supported by higher loan disbursements, better yields, and an expanding borrower base across the renewable ecosystem — including solar, wind, biomass, and energy efficiency projects.
IREDA’s total income from operations climbed around 26% year-on-year to ₹2,056.9 crore, up from ₹1,629.6 crore in Q2 FY25. Despite the higher income, the company managed to keep its expense growth moderate, up by just about 16%, showing improved cost discipline.
Operating profit rose more than 50% to ₹776 crore, while the net interest margin (NIM) improved to 3.72% from 3.34% last year, indicating stronger efficiency in asset utilization and loan pricing.
Loan Book Expansion and Sectoral Growth
IREDA’s core focus remains on funding renewable energy and allied infrastructure projects. During Q2 FY26, its loan book grew an impressive 31% year-on-year, reaching ₹84,477 crore compared to ₹64,564 crore a year earlier.
The company’s loan sanctions nearly tripled, soaring 145% to ₹21,408 crore, while disbursements rose 81% to ₹8,062 crore. These numbers highlight IREDA’s growing role in driving India’s energy transition, with increased participation in emerging areas like green hydrogen, battery storage, and electric mobility infrastructure.
As of September 30, 2025, IREDA’s net worth stood at ₹12,920 crore, up 38% year-on-year, reflecting improved profitability and capitalization. Its debt-equity ratio also improved to 5.41 from 5.85 last year, indicating healthier leverage management.
Asset Quality: A Slight Concern
While the topline growth paints a strong picture, asset quality showed some signs of stress. Gross Non-Performing Assets (NPA) rose to ₹3,353 crore from ₹1,415 crore a year ago, while Net NPAs increased to ₹1,627 crore from ₹666 crore. The provision coverage ratio declined slightly to 51.48% from 52.98%.
Although the rise in NPAs warrants close monitoring, analysts note that the increase stems partly from legacy exposures and project delays in certain renewable segments, rather than systemic deterioration. Given IREDA’s strong provisioning track record and government backing, the company is expected to manage asset quality prudently in upcoming quarters.
Stock Market Reaction
Following the announcement, IREDA shares gained around 3–4% in early trade, touching a day’s high of ₹155.59 before settling with gains. The upbeat market reaction reflects investor confidence in the company’s strong performance and growth outlook.
Despite some volatility earlier this year — when the stock saw a correction of nearly 30% from its highs — the Q2 results have reignited optimism around IREDA’s fundamentals. The company now commands a market capitalization of over ₹43,000 crore, underscoring its strong positioning within the renewable financing segment.
Growth Drivers and Future Outlook
IREDA’s growth is being driven by India’s aggressive push toward achieving 500 GW of renewable energy capacity by 2030. As the primary government-backed financier for clean energy projects, the company has access to a deep project pipeline across solar, wind, hydro, green hydrogen, and biofuel sectors.
Key growth enablers include:
- Rising renewable project sanctions: A growing number of developers are turning to IREDA for competitive financing.
- Government focus on green infrastructure: Initiatives like the Green Energy Corridor and National Hydrogen Mission are expanding financing opportunities.
- Improved operational efficiency: With digital loan management and better risk assessment, IREDA is lowering turnaround times and improving portfolio quality.
However, challenges persist. The uptick in NPAs and potential interest rate pressures could weigh on profitability in the medium term. Managing credit risk, diversifying funding sources, and maintaining healthy capital adequacy will remain crucial focus areas.
Leadership Commentary
IREDA’s management emphasized that the Q2 results underscore the company’s commitment to driving India’s green growth agenda. They highlighted the continued increase in sanctions and disbursements as evidence of the sector’s strong momentum. The management also reaffirmed plans to strengthen risk management frameworks and diversify funding through new instruments like green bonds.
Conclusion
IREDA’s Q2 FY26 performance showcases a company in growth mode — expanding its reach, improving margins, and solidifying its position as the backbone of India’s renewable energy financing ecosystem.
While rising NPAs signal a need for cautious optimism, the underlying fundamentals remain robust. With strong policy tailwinds, a diversified loan book, and a rising appetite for clean energy financing, IREDA is well-positioned to sustain its growth trajectory and remain a key player in India’s sustainable energy future.
Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.
