Shares of the Indian Renewable Energy Development Agency (IREDA) declined nearly 4% in intraday trade on Wednesday after the National Stock Exchange (NSE) revoked the inclusion of the state-owned company in key indices due to its non-compliance with SEBI portfolio concentration norms.
“As IREDA breached one of the requirements of SEBI Portfolio Concentration Norms for Equity Exchange Traded Funds (ETFs) and Index Funds related to impact cost, the committee has decided to revoke its earlier decision to include IREDA announced on February 28, 2024,” the NSE said in a release.
On February 28, 2024, as part of a periodic review of various indices, the Index Maintenance Sub-Committee (Equity) of NSE Indices announced the inclusion of IREDA in Nifty 500, Nifty Midcap 150, Nifty Midcap 100, Nifty 200, Nifty LargeMidcap 250, Nifty MidSmallcap 400, Nifty Total Market and Nifty500 Multicap 50:25:25 indices, with effect from March 28, 2024.
In the Nifty 500, IREDA will be replaced by V-Guard Industries as the NSE Indices has decided to revoke its exclusion. Similarly, it will be replaced by BSE Ltd in Nifty Midcap 150, Nifty Smallcap 250, Nifty Midcap 100, Nifty 200, and Nifty LargeMidcap 250.
The above change in the Nifty 500 index will also be applicable to the Nifty500 Multicap 50:25:25 index, as per the NSE release.
Weighed down by the development, IREDA shares fell as much as 3.7% to hit an intraday low of ₹124.50 on the BSE, while its market capitalization slipped to ₹34,000 crore. The PSU stock has fallen 17% so far this month and more than 6% in two sessions.
IREDA, which made its market debut on November 29, 2023, has seen its stock price rising more than 300% against the initial public offering (IPO) price of ₹32 apiece. The counter touched its record-high level of ₹215 on February 6, 2024, while it hit a low of ₹49.99 on its debut.
In the calendar year 2024, IREDA shares have risen nearly 21%, while it dropped 42% from its record high levels touched on February 6. The counter has lost nearly 28% in the past month as investors resorted to profit booking at higher levels.
Established in March 1987, IREDA, which comes under the Ministry of New and Renewable Energy (MNRE), was the first PSU to list on stock exchanges after a long gap of 17 months after LIC’s market debut in May 2022. The company received an overwhelming response for its ₹2,150 crore IPO, which was subscribed 38.8 times as investors bid for 1,827 crore equity shares against the offer size of 47.09 crore. The issue was a combination of a fresh issue of 40.31 crore shares and an offer for sale of 26.87 crore shares by existing shareholders at a price band of ₹30-32 per share.
Despite recent corrections, analysts remained positive on IREDA amid its strong fundamentals and growth potential as the company focuses on the burgeoning renewable energy sector, which makes it an attractive investment proposition. The company, a power sector non-bank financial company (NBFC), provides a comprehensive range of financial products and related services, from project conceptualization to post-commissioning, for renewable energy projects and other value chain activities such as equipment manufacturing and transmission.
The article originally appeared on Fortune India.