Last update:November 13, 2024, 09:34 IST

NTPC Green Energy’s IPO will be the third-largest stock offering in India this year, after Hyundai Motor India and Swiggy.

The NTPC Green Energy IPO is entirely a new issue of shares with no offer for sale component. (File photo: Reuters)

NTPC Green Energy IPO: NTPC Green Energy, a subsidiary of power producer NTPC Ltd, will launch its much-anticipated initial public offering (IPO) on November 19. The IPO will close on November 22. The company has also set the IPO price band at Rs. 102-Rs 108 each, according to a newspaper announcement.

Anchor investors will be able to participate in the IPO on November 18.

NTPC Green Energy’s IPO will be the third-largest stock offering in India this year, after Hyundai Motor India and Swiggy.

The NTPC Green Energy IPO will also have a shareholder quota. Thus, those who hold shares of NTPC as on the date of the RHP, which will be filed later, can participate in the shareholder category in the IPO.

NTPC Green Energy IPO: What Investors Should Do to Increase Chances of IPO Landing

Since the NTPC Green Energy IPO will also have a shareholder quota, investors can buy one NTPC share now to be eligible under the shareholder category. This will increase their chances of IPO award. Those who hold shares of NTPC as on the date of the RHP, which will be filed subsequently, can participate in the shareholder category in the IPO.

NTPC Green Energy IPO: What Analysts Say

ICICI Securities has assigned a ‘buy’ rating to NTPC shares. NTPC Green Energy Limited (NGEL), a wholly owned subsidiary of NTPC, is planning to make its debut on the stock exchanges as the company files its DRHP.

“We analyze NGEL’s business, review its valuation metrics and assess key concerns. The company has 3.2 GW of operational capacity, 12 GW of renewable energy (RE) projects under construction and a future development pipeline of 11 GW. NGEL is looking to not only set up utility-scale renewable energy projects but also tie up with corporates and PSUs to meet their captive renewable energy needs. We expect the return ratios of captive projects to be higher than those of large-scale projects,” ICICI Securities said in a note.

NTPC is targeting 60 gigawatts (GW) of renewable energy (RE) capacity by FY32.

“We estimate revenue of Rs 117 billion (Rs 11,700 crore), EBITDA of Rs 95-100 billion (Rs 9,500-10,000 crore) for its portfolio. EV/EBITDA remains the best valuation measure to analyze NGEL’s RE portfolio. Keep BUY and TP of Rs 495 on NTPC,” ICICI Securities said.

“The IPO comes at a time when NTPC, a large thermal power company, is looking for other energy avenues to diversify and increase its revenues,” said Kranthi Bathini, director of equity strategy at WealthMills Securities, according to Reuters.

“Given the fact that green energy will remain in focus for the foreseeable future, investors will definitely want a piece of this pie,” Bathini added.

NTPC Green Energy IPO: more details

The proceeds from the fresh issue, to the tune of Rs 7,500 crore, will be used to invest in its wholly owned subsidiary, NTPC Renewable Energy Limited (NREL), for repayment/prepayment, in whole or in part, of certain borrowings in courses from which NREL benefited; and the general objectives of the company.

Promoted by NTPC Ltd, NTPC Green Energy is the largest public sector renewable energy company (excluding hydropower) in terms of operating capacity as of June 30, 2024 and power generation in FY 2024, according to a CRISIL report mentioned in the DRHP.

As of June 30, 2024, NTPC Green’s “portfolio” comprised 14,696 MW, including 2,925 MW of operating projects and 11,771 MW of contracted and awarded projects. Additionally, it has 10,975 MW of “pipeline capacity”, totaling 25,671 MW with its portfolio.

The company’s renewable energy portfolio includes solar and wind power assets across multiple locations in over six states, which helps mitigate the risk of location-specific generation variability, according to a CRISIL report mentioned in the DRHP.

As of June 30, 2024, NTPC Green had 15 offtakers across 37 solar projects and 9 wind projects and was in the process of constructing 31 renewable energy projects across 7 states, totaling 11,771 MW contracted and awarded. It also had 2,925 MW in operation in 14 solar projects and 2 wind projects.

Its operational capacity was 3,071 MW of solar projects and 100 MW of wind projects in six (6) states as of August 31, 2024, strategically focused on developing a portfolio of large-scale renewable energy projects, as well as projects for public sector companies. (“PSU”) and Indian companies.

NTPC Green Energy’s operating revenue grew at a CAGR of 46.82%, from ₹910.42 crore in FY2022 (on a specific basis) to ₹1,962.60 crore in financial year 2024 (on a restated basis). Profit after tax grew at a CAGR of 90.75%, from ₹94.74 crore in FY2022 (on special basis) to ₹344.72 crore in FY2024 (on a retired base).

For the three-month period ended June 30, 2024, operating revenue and profit after tax stood at Rs 578.44 crore and Rs 138.61 crore, respectively, on a restated basis.

IDBI Capital Markets & Securities Limited, HDFC Bank Limited, IIFL Securities Limited and Nuvama Wealth Management Limited are the lead managers of the issue and KFin Technologies Limited is the offer registrar.