IREDA April-June Net Profit Drops 36% On Sharp Jump In Impairments

Indian Renewable Energy Development Agency Ltd. on Thursday reported a 36% fall in net profit for the April-June quarter to ₹2.47 billion, marking its first year-on-year profit decline since its listing in November 2023. Sequentially, net profit dropped 51% from ₹5.02 billion in the January-March quarter.

The drop in earnings was primarily due to a spike in impairment charges on financial instruments, which rose to ₹3.63 billion in the June quarter, compared with a gain of ₹300 million a year ago.

Asset quality also deteriorated during the quarter. Gross non-performing asset ratio rose to 4.13% from 2.45% in the March quarter and 2.19% a year ago. The net NPA ratio increased to 2.06% from 1.35% a quarter ago and 0.95% a year ago.

IREDA said the rise in NPAs was largely due to the reclassification of a borrower’s ₹7.83 billion loan from Stage-II to Stage-III. Adequate provisions had already been made earlier under the expected credit loss methodology, the company said.

The company also downgraded Gensol Engineering Ltd. and its subsidiary Gensol EV Lease Pvt. Ltd. as NPAs during the quarter. IREDA had initiated insolvency proceedings against Gensol Engineering and sought to recover ₹5.10 billion from it and ₹2.19 billion from its EV unit through the Debt Recovery Tribunal.

Total income during the quarter rose 30% on year to ₹19.60 billion, while revenue from operations climbed 29% to ₹19.47 billion. Other income jumped to ₹122 million from ₹4 million a year ago.

However, total expenses surged 60% to ₹16.55 billion, led by higher impairments and a 25% rise in finance costs to ₹12.18 billion.
IREDA's net interest margin improved to 3.60% in Apr-Jun from 3.29% a year ago, while the cost of borrowing dropped to 7.40% from 7.78%. Capital adequacy ratio improved to 19.58% from 15.26% a year ago.