IREDA secures cost-effective JPY26bn loan from SBI Tokyo, strengthening global standing

The Indian Renewable Energy Development Agency Limited (IREDA) has taken a significant step in expanding its funding base by securing an External Commercial Borrowing (ECB) facility of JPY 26 billion from the Tokyo branch of the State Bank of India (SBI). This facility, which includes a JPY 10 billion Green Shoe Option, is structured as an unsecured five-year loan with a bullet repayment at maturity.

The deal, aimed at reinforcing IREDA’s global financial footprint, is expected to reduce borrowing costs significantly, with the landed cost after hedging falling below 7%. This makes it a more attractive alternative compared to domestic loans of similar tenure.

Stock Performance and Market Reaction

Following the announcement on March 27, 2025, IREDA’s stock witnessed a notable uptick, reflecting investor optimism regarding the company’s strengthened financial position. On March 28, shares climbed by approximately 3%, reaching an intraday high of ₹166.75 on the Bombay Stock Exchange (BSE). The stock’s rally signals market confidence in IREDA’s ability to expand its lending capacity and boost renewable energy financing.

As of March 28, IREDA was trading at ₹160.59, with a market capitalization of ₹43,163 crore. The company maintains a Price-to-Earnings (P/E) ratio of 28.1 and a Price-to-Book (P/B) ratio of 4.62, underscoring its strong valuation in the renewable sector.

Boosting Renewable Energy Financing and Market Confidence

IREDA’s Chairman and Managing Director, Pradip Kumar Das, emphasized that the ECB facility would allow the company to diversify its resource base while optimizing lending costs. This move aligns with India’s aggressive renewable energy expansion goals, offering more competitive financing options for green energy projects.

The financial arrangement also signals growing international confidence in IREDA, which maintains a ‘BBB-‘ long-term and ‘A-3’ short-term rating with a Stable Outlook from S&P Global. This reinforces its reputation as a key player in India’s clean energy transition, known for strong corporate governance and financial stability.

Strategic Advantage of the SBI Tokyo Loan

The IREDA ECB facility comes at a time when India is accelerating efforts to meet its renewable energy commitments, including the target of 500 GW of non-fossil fuel capacity by 2030. With access to cheaper international funding, IREDA can extend cost-efficient loans to developers, making renewable projects more financially viable.

Additionally, SBI Tokyo’s participation in this deal strengthens financial ties between Indian institutions and global investors, potentially paving the way for further overseas funding opportunities in the renewable sector.

Investment Outlook: Buy, Sell, or Hold?

IREDA’s recent financial maneuvering and access to lower-cost international funding have positioned it as a strong player in the renewable energy sector. The stock has shown positive momentum following the ECB announcement, but potential investors should consider market volatilities before making a decision.

The stock’s beta of 1.5 suggests higher sensitivity to market movements, making it a moderate-risk, high-potential investment. Long-term investors focused on green energy financing may see IREDA as a compelling buy, while short-term traders should monitor fluctuations carefully.

Implications for Investors and the Renewable Energy Sector

IREDA’s ability to secure funding at competitive rates from international sources underscores its financial strength and strategic foresight. For investors, this development reaffirms IREDA’s credibility as a leading renewable energy financier with access to cost-effective global capital.

As India continues its transition to clean energy, initiatives like this highlight how financial institutions are aligning their strategies with sustainability goals. The success of this ECB facility could encourage more international lenders to participate in India’s green energy push, helping to meet ambitious renewable energy financing targets.