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Indian Renewable Energy Development Agency Ltd., an Indian state-owned lender to renewable energy projects, surged in its trading debut in Mumbai, underscoring investor interest in sustainability-related companies in the South Asian country.

The stock ended the session at 60 rupees, 88% above its offer price of 32 rupees, the best trading debut by a state-backed firm in India after the shares of Indian Railway Catering and Tourism Corp. more than doubled on their first day of trading in 2019.  

Demand for IREDA exceeded shares on offer by almost 40 times, as investors piled into the company that’s likely to gain from plans to expand India’s renewable capacity. 

The stock was “fairly valued” at the offer price and in line with peers, Ethan Aw, an analyst at Aequitas Research wrote on Smartkarma prior to the debut. Strong demand from institutions boosted subscription rates for the IPO that raised 21.5 billion rupees ($258 million), he said.

Companies that started trading in India after raising between $100 million and $500 million rose 19% on average on their first day of trade, according to data compiled by Bloomberg.

IREDA is the largest new share sale by an Indian state-run entity since the Life Insurance Corp. of India’s record debut in May 2022. The newcomer is the nation’s largest shadow lender focusing on green financing and is seen as a front-runner to fund such projects estimated to be worth nearly 28 trillion rupees.

“There is going to be massive growth in spending on renewables and there are very few specialized agencies working in this area, which makes companies such as IREDA attractive,” said Jigar Shah, head of sustainability research at Maybank Investment Banking Group.

    

--With assistance from Paresh Jatakia.

(Updates shares.)

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