IREDA profit slips despite revenue growth as margin falls for second quarter
Expenses grew much faster than revenue, while higher interest costs and a 2.02-point rise in the tax rate weighed on sequential profit.
Filed 29 May 2026, 21:41 IST · after market close · Indian Renewable Energy Development Agency Ltd (IREDA)
Key takeaways
- Consolidated net profit fell 1.78% year on year to Rs 492.63 cr despite 14.19% revenue growth.
- Operating margin narrowed 5.19 percentage points year on year to 85.81% as expenses grew 80.15%, far faster than revenue.
- The stock fell 5.24% on the first trading day and 9.82% by day five, a sharper-than-usual reaction versus its 5.64% median post-results move.
Price around the results
Revenue growth did not translate into higher profit
IREDA’s consolidated revenue grew 14.19% year on year and 2.12% sequentially, but net profit declined 1.78% year on year and 15.81% from Q3FY26. Operating profit rose 7.67% year on year, but interest costs increased 12.42%, outpacing that gain and reducing profit before tax. Other income contributed only 0.96% of pre-tax profit, so it was not a material support to earnings quality.
Cost growth drove the margin compression
Expenses increased 80.15% year on year against 14.19% revenue growth, narrowing operating margin by 5.19 percentage points. The sequential pattern was similar: expenses rose 72.29% while revenue grew 2.12%, cutting margin by 5.78 percentage points. The tax rate also rose 2.02 percentage points sequentially to 20.43%, adding to the pressure on net profit.
Margin remains above sector median but has fallen for two quarters
Operating margin declined from 93.29% in Q2FY26 to 91.59% in Q3FY26 and 85.81% in Q4FY26, marking a second consecutive quarterly fall after the Q2 peak. It was still 26.4 percentage points above the 59.41% median among 52 Financial Services peers that had reported the quarter. The quarter’s margin therefore remained high relative to peers, even as its own direction weakened.
The market reaction was worse by day five
The stock fell 5.24% on the first trading day after the results, with the decline widening to 9.82% by day five; it underperformed the market by 8.02% over that five-day period. IREDA has risen after five of its last eight results and fallen after three, with a median absolute move of 5.64%, making the day-one reaction broadly in line with its history but the five-day decline more severe.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,175 cr | ₹2,130 cr | +2.12% | +14.19% |
| Other income | ₹6 cr | ₹10 cr | -38.93% | -43.84% |
| Expenses | ₹309 cr | ₹179 cr | +72.29% | +80.15% |
| Operating profit | ₹1,867 cr | ₹1,951 cr | -4.33% | +7.67% |
| Operating margin (%) | 85.81% | 91.59% | — | — |
| Interest | ₹1,241 cr | ₹1,233 cr | +0.67% | +12.42% |
| Depreciation | ₹13 cr | ₹11 cr | +14.52% | +16.22% |
| Profit before tax | ₹619 cr | ₹717 cr | -13.67% | -1.68% |
| Tax | ₹127 cr | ₹132 cr | -4.18% | -1.30% |
| Net profit | ₹493 cr | ₹585 cr | -15.81% | -1.78% |
| EPS (₹) | ₹1.76 | ₹2.09 | -15.79% | -5.88% |
Operating margin of 85.81% compares with a Financial Services sector median of 59.41% across 52 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -5.24% | -4.54% |
| Next session | -6.24% | — |
| 5 sessions | -9.82% | -8.02% |
| 15 sessions | -1.80% | — |
| 30 sessions | -8.38% | — |
Volume on the results session was 3.03× its 20-day average.
What to watch
- Whether operating margin recovers from 85.81% after two consecutive quarterly declines.
- Whether expense growth moderates from 80.15% year on year.
- Whether interest-cost growth stays below the 12.42% year-on-year increase recorded this quarter.