Indian Renewable (IREDA)

FairStock Score: 60/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong growth: sales +34.67%, profit +42.70%; latest quarter net profit ₹585 Cr on sales ₹2,130 Cr
• ROE of 18.34% and Piotroski F-Score of 7/9 suggest good fundamentals and capital efficiency
• Promoter holding of 71.76% aligns majority owners with public shareholders
• P/E of 18.24 is not excessive relative to 42.70% profit growth

Concerns

• High leverage with debt/equity of 6.31 and negative free cash flow of -₹14,978 Cr
• No margin of safety: price ₹137.50 vs Graham Number ₹78.53, P/B at 3.76 times book value
• Altman Z-Score of 0.78 and EV/EBITDA of 898.85 signal potential financial fragility, though Z is less applicable to lenders
• Zero dividend yield means all shareholder returns depend on continued growth

AI Analysis

As a value investor, I first ask what kind of business this is. Indian Renewable is a financial institution—a lender—so I should not judge it like an industrial company. The recent numbers are eye-catching: sales grew 34.67%, profit grew 42.70%, and the latest quarter delivered ₹2,130 Cr in sales with ₹585 Cr in net profit. ROE is 18.34%. That is a fast grower, no doubt. But where is the moat? I see high leverage—debt/equity of 6.31 times—and ROCE of only 9.37%, which tells me the return is amplified by borrowed money, not by a wide economic castle. At ₹137.50, the market price is 18.24 times earnings and 3.76 times book value, while book value is only ₹36.54. Graham would compute a number of ₹78.53, leaving a margin of safety of -55.67%. In other words, I am being asked to pay a steep premium for a leveraged growth story. The negative free cash flow of -₹14,978 Cr is a red flag: for a lender it can mean loan book expansion, but it also means the business must keep borrowing or raising capital to grow. Altman Z of 0.78 is normally a distress level; for financials it is less reliable, but it still makes me cautious. EV/EBITDA of 898.85 suggests the cash earnings from operations are tiny relative to the total valuation. On the positive side, promoter holding of 71.76% aligns owners with public shareholders, and a Piotroski F-Score of 7/9 gives me confidence in the underlying financials. Dividend yield is zero, so all return expectations rest on growth continuing. This may be an excellent business, but at this price it is not a margin-of-safety investment for me.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer