The Indian Renewable Energy Development Agency is set to receive substantial budget enhancement, with proposals indicating a potential threefold increase to ₹40,000 crores. This significant expansion in funding allocation demonstrates the government's renewed focus on accelerating renewable energy development across the country.

Enhanced Budget Allocation

The proposed budget increase represents a major boost for IREDA's operational capacity and project financing capabilities. The substantial jump to ₹40,000 crores will enable the agency to undertake larger-scale renewable energy initiatives and expand its reach across various clean energy sectors.

Support for Small Hydro Projects

A key component of the enhanced budget framework includes dedicated support for small hydro projects. The allocation provides for 25-30% intellectual assistance, which will help developers navigate technical challenges and optimize project implementation. This targeted support mechanism aims to accelerate the development of small-scale hydroelectric facilities across suitable locations.

The intellectual assistance component will likely cover technical expertise, project planning support, and knowledge transfer initiatives. Such comprehensive backing is expected to reduce development risks and improve project viability for small hydro installations.

Strategic Impact on Renewable Energy Sector

The proposed budget expansion positions IREDA as a more robust financial institution capable of supporting India's renewable energy transition. The enhanced funding capacity will enable the agency to:

• Finance larger renewable energy projects
• Provide comprehensive technical support
• Accelerate clean energy adoption
• Support emerging technologies in the renewable sector

This budget enhancement aligns with India's commitment to expanding its renewable energy capacity and achieving sustainable development goals. The focus on small hydro projects particularly addresses the need for distributed clean energy generation in suitable geographical locations.

IREDA shares are expected to be in focus following the company's strong Q3 business update and robust Q2 financial performance. The renewable energy financing company has demonstrated significant growth across key lending metrics, showcasing consistent operational excellence despite challenging market conditions for its stock.

Strong Q3 Business Performance

The company's Q3 performance reflects substantial growth momentum across all major operational parameters. IREDA achieved remarkable progress with loan disbursements surging by 44.00% year-on-year, indicating strong execution capabilities and increased market demand for renewable energy financing.

Q2 FY26 Financial Results Show Strong Profitability

For the September quarter, IREDA reported impressive financial performance with consolidated net profit reaching ₹549.33 crores, marking a 41.50% year-on-year increase from ₹388.00 crores in the corresponding quarter last year. Revenue from operations rose 26.20% year-on-year to ₹2,057.00 crores, compared with ₹1,629.55 crores in Q2 FY25.

Asset Quality Improvements

Asset quality showed improvement on a quarter-on-quarter basis in Q2. Gross non-performing assets declined to 3.97% from 4.13% in the June quarter, while net non-performing assets improved to 1.97% from 2.06% in the preceding quarter, demonstrating enhanced portfolio management.

Stock Performance and Market Position

Despite strong operational and financial metrics, IREDA shares have faced market headwinds, declining 37.00% over the past year. The stock remains significantly below its previous levels, having dropped over 55.00% from its all-time high of ₹310.00, positioning it among the underperforming stocks in the midcap segment.

Fundraising Initiatives and Capital Plans

IREDA is actively pursuing capital raising initiatives, currently in the process of raising ₹3,000.00 crores through an institutional share sale. The company had previously raised ₹2,000.00 crores through the QIP route, with the board having approved raising ₹5,000.00 crores through various methods. The government maintained a 71.76% stake in the company at the end of the September quarter.

The strong operational performance and improved financial metrics position IREDA favorably in the renewable energy financing landscape, with consistent growth across major business parameters despite market challenges affecting stock performance.