NTPC Green Energy IPO: What You Need to Know Before Investing
The shares of Delhi-based NTPC Green Energy are being sold for between Rs 102 and Rs 108 each. A minimum of 138 shares and multiples are available for investors to apply for.
Bidding for NTPC Green Energy's initial public offering (IPO) begins today, Tuesday, November 19. The fixed price range for the PSU company's share sales is Rs 102-109 per share. Until Friday, November 22, investors may apply for a minimum of 138 stock shares and their multiples.
NTPC Green Energy, a renewable energy firm that was founded in April 2022 and is supported by NTPC under the Ministry of Power, focuses on completing projects using both organic and inorganic methods. As of August 31, 2024, the company's operational capacity was 3,071 MW from solar projects and 100 MW from wind projects spread over six states.
Through its maiden stake sale, which is a completely new offer of up to 92.68 crore equity shares, NTPC Green Energy hopes to raise Rs 10,000 crore. While eligible shareholders of NTPC Ltd. have shares worth Rs 1,000 allocated for them, the company has reserved shares worth Rs 200 crore for its eligible staff, who would receive a discount of Rs 5 per share.
The issue's net proceeds will be used for general corporate purposes, repayment and/or prepayment in full or in part of the existing borrowings taken out by NREL, and investment in the fully owned subsidiary, NTPC Renewable Energy (NREL).
Qualified institutional bids (QIBs) will receive 75% of the net offer from NTPC Green Energy, while non-institutional investors (NIIs) will receive 15%. The remaining 10% of the net offer will go to the issue's retail investors.
As of August 31, 2024, NTPC Green Energy operated 3,071 MW of solar projects and 100 MW of wind projects in six states. 11,771 MW of contracted and awarded projects and 2,925 MW of running projects made up the company's 14,696 MW portfolio. There were 15 off-takers spread between 9 wind and 37 solar projects.
As of the last time we heard, NPTC Green Energy was trading at a grey market premium (GMP) of less than Rs 1 per share, which indicates that investors will see a modest increase of less than 1%. Over the long weekend, its premium in the unofficial market, however, was between Rs 1 and Rs 1.5.
NTPC Green Energy reported a net profit of Rs 138.61 crore for the quarter that concluded on June 30, 2024, on top of Rs 607.42 crore in sales. For the fiscal year 2023–2024, the company's revenue was Rs 2,037.66 crore, while its bottom line was Rs 344.72 crore. A modest Rs 91,000 crore will be the company's overall market capitalization.
NTPC Green Energy
Rating: Subscribe for long-term
By FY25, FY26E, and FY27E, respectively, NTPC Green Energy hopes to expand its operational capacity from 3.3 GW in September 2024 to 6, 11, and 9 GW. However, this is a purely long-term tale when you take into account its existing capacities now and its future expanding capacities. We think this problem may be taken into account for its long-term development," Anand Rathi Research stated.
According to valuation, the issue is asking for a market capitalization of Rs 91,000 crore at the upper price band of Rs 108. Based on FY25E annualized earnings and fully diluted post-IPO paid-up capital, the company is requesting a PB of 4.96 times and PE of 259.56 times, which looks aggressively priced. The issue has been given a "subscribe for long-term" rating.
Reliance Securities
Rating: Subscribe for long-term
Strong credit ratings that allow for a cheap cost of finance when carrying out large-scale projects, as well as NTPC's financial stability and long-standing connections with suppliers and off-takers, help NTPC Green grow its revenues. According to Reliance Securities, the management team's in-depth domain knowledge is concentrated on innovative energy solutions.
To help India reach its net zero targets, it is developing solutions like green hydrogen, green chemicals, and storage with sensible expansion, it continued. "We believe with a prudent business model and strong earnings growth with improved financials and return ratios, we recommend a 'subscribe' to the issue for the long term," Reliance Securities stated.
Swastika Investment
Rating: Subscribe for long-term
The company is fully owned by NTPC Green Energy. Geographically and off-taker-wise, its portfolio is strong and diverse. The company has steady top-line growth, although there are short-term swings in profitability and margin. However, according to Swastika Investment, the issue has aggressive pricing based on the PE ratio, and they only advise long-term investors to consider it.
Arihant Capital Markets
Rating: Subscribe with caution
Based on operational capacity, NTPC Green Energy is among the top 10 renewable energy companies in India. As of September 24, it had a robust portfolio of 16,896 MW, comprising 13,576 MW of contracted and awarded projects and 3,320 MW of running projects. According to Arihant Capital Markets, the pipeline's 9,175 MW of capacity demonstrates commercial visibility moving forward.
Green hydrogen, green chemicals, and battery storage are some of the new energy options that NTPC Green is concentrating on as growth areas. It stated with an unsubscribe for long-term' for aggressive investors that it will keep using the economies of scale of the NTPC group for initiatives that will result in commercial possibilities with better terms and new technology that will lead to cost reductions moving forward.
StoxBox
Rating: Subscribe for long-term
According to StoxBox, NTPC Green Energy makes use of NTPC's five-decade history, a wealth of experience, strategic alliances, and cutting-edge operations and maintenance technologies. "Given its strategic development and strong financial growth, the company is well-positioned to capitalize on growth opportunities in the renewable sector, we recommend a 'subscribe for long-term' for IPO," it stated.
Chola Securities
Rating: Subscribe
By 2032, the NTPC Group wants to increase the percentage of non-fossil-based capacity in its portfolio to 45–50%, which includes 60 GW of renewable power. According to Chola Securities, NTPC Green's post-issue market capitalization is Rs 3,490 crore per GW of FY30e of projected capacity, which represents a 40% discount to peers' expected capacity.
"NTPC Green's per-GW valuation is much lower than that of its peers, despite its aggressive expansion plan, providing investors with great upside potential. It further stated, "We have subscribed rating for NTPC Green Energy IPO.
Marwadi Financial Services
Rating: Subscribe
According to Marwadi Financial Services, NPTC Green is expected to list at a P/E ratio of 208 times with a market capitalization of Rs 91,000 crore, while its competitor, Adani Green Energy, is already trading at a P/E ratio of roughly 182 times. "We assign a 'subscribe' rating to this IPO as the company is promoted by NTPC, long-term relationships with off-takers and suppliers, and financial strength," it stated.
Mehta Equities
Rating: Subscribe with caution
With a solid portfolio of 26,071 MW that includes contracted, pipeline, and operational projects, NTPC Green exhibits significant development potential. Mehta Equities stated that its varied regional presence reduces risk and its emphasis on long-term Power Purchase Agreements (PPAs) with public utilities and the government guarantees steady cash streams.
"The company is requesting a PE of 259.56 times and a P/B of 4.96 times, which seems like aggressive pricing. NTPC is well-positioned to take advantage of the growing demand for sustainable energy solutions thanks to its strong financial position and aggressive renewable energy goals. "Only risk-taking investors should subscribe to the IPO for the long run," the statement stated.
Hensex Securities
Rating: Subscribe for long-term
In terms of operating capacity as of September 2024 and electricity generation in FY24, NTPC Green Energy is the biggest public sector renewable energy company (apart from hydro). According to Hensex Securities, it is strategically focused on building a portfolio of utility-scale wind and solar energy projects, as well as projects for PSUs and corporations.
"The business is making investments in battery storage systems and capabilities, hydrogen, green chemicals, and related technologies. By 2032, NTPC Green Energy hopes to have 60 GW of RE capacity. With an eye toward long-term investments, we advise you to "subscribe" to the issue," it continued.
Master Capital Services
Rating: Subscribe for long term
According to Master Capital Services, NTPC Green Energy, one of the leading providers of renewable energy in India, wants to improve its standing in its core solar and wind energy operations while concentrating on new markets and off-taker clients. "New energy solutions are being invested in. Long-term investors can put their money into the IPO," it continued.
Canara Bank Securities
Rating: Subscribe for long term
NTPC Green is in a position to increase its operating profits as economies of scale improve and battery prices fall. According to Canara Bank Securities, its emphasis on energy storage and green hydrogen is in line with recent developments in the renewable energy industry and presents new growth opportunities.
"NTPC Green is in an excellent position to provide investors with long-term value because of its robust financial support, aggressive expansion ambitions, and alignment with India's move to renewable energy. "For possible long-term benefits, we advise you to subscribe to this issue," it continued.