Government Finance lending companies are known for their simple business model of financing different government projects. Out of all the companies, the Indian Renewable Energy Development Agency (IREDA) and Indian Railway Finance Corporation (IRFC) are the two most prominent government organizations that offer loans for renewable energy projects and railway infrastructure development projects respectively. With a strong business outlook, government backing, and increased investment in infrastructure-based projects, Both IREDA and IRFC companies and their respective stocks offer an opportunity for growth and stable returns. Let’s learn about the two companies and compare their stocks and overall operations:
IREDA:
The Indian Renewable Energy Development Agency (IREDA) is a government organization that finances the development and establishment of renewable energy projects like wind, Solar, and biomass. With the main aim of promoting renewable energy sources of power, IREDA provides loans and helps in financing such projects. Being a non-banking finance corporation, the loans are offered at affordable prices and with complete security through government support.
Financial Performance:
With a net worth of more than ₹6000 crores, the company even has a strong order book ₹47,000 crores comprising loan offerings for different renewable energy projects. Moreover, with an ever-increasing loan demand and push for renewable energy as a source of power by the government, the company has been able to maintain and even increase its overall profitability exponentially. During the current financial year of 2024-25, the company recorded a revenue of ₹1,698.99 crore and PAT of ₹425.37 crore.
Stock Analysis:
The IREDA share price is at ₹160.91 delivering a CAGR of 38.3% in the last 3 years and 21.8% in the last 5 financial years. With strong returns, business stability, and an increase in the funding requirements for renewable power projects, the IREDA stock is known for its high growth potential.
Indian Railway Finance Corporation (IRFC)
The Indian Railway Finance Corporation or IRFC is engaged in financing Indian railway projects. Railway expansion, infrastructure development, and modernization are certain sectors that the company handles and helps with its financing. The company even funds railway development projects, acquires rolling stock like coaches and locomotives, and leases them to the Indian Railways.
Financial Performance:
The company is also known for its strong business outlook and overall performance. With a net worth of massive ₹45000 crores, the company possesses an ever-growing business loan book, stable financial performance, and revenue of more than ₹23,000 crores. Moreover, the company booked a revenue of ₹6,763.43 crores making it one of the most profitable companies in India.
Stock Analysis:
Trading at ₹119.27, the IRFC share price has increased by almost 75.3% in the last 3 financial years delivering exponential returns to its investors. Moreover, the IRFC stock has one of the best dividend yields of 1.26%. Consistent returns and strong financial backing make it one of the best stocks that Investors can select for investment.
Conclusion:
Comparing IRFC and IREDA based on their financial performance and stock returns, IRFC offers stability along with consistent returns. On the other hand, IRDEA stock delivers higher growth potential with equal risk. Investors must therefore opt for diversified investment along with a complete analysis of the two government finance lending stocks.
