NTPC Green Energy IPO to open soon: Investors should do this to increase chances of allotment

NTPC Green Energy IPO: NTPC Green Energy’s IPO has been eagerly awaited by investors ever since the company filed its draft public offering documents. On Monday, ICICI Securities assigned a ‘buy’ rating to NTPC shares. It said NTPC Green Energy Limited (NGEL), a wholly-owned subsidiary of NTPC, is set to make its debut on the bourses as the company files its DRHP.

“We analyse NGEL’s business, look at its valuation multiples and assess key concerns. The company has an operational capacity of 3.2 GW, 12 GW of contracted renewable energy (RE) projects under construction and a future expansion plan of 11 GW. NGEL is not only looking to set up utility-scale RE projects but also partner with corporates and PSUs for their in-house RE requirements. We expect captive return multiples to be higher than utility-scale projects,” ICICI Securities said in a note.

NTPC aims to achieve 60 gigawatts (GW) of renewable energy (RE) capacity by fiscal year 2032.

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

Shares of NTPC on Monday rose by Rs 2.35, or 0.55 per cent, to Rs 426.35 apiece on the BSE.

NTPC Green Energy, the renewable energy arm of NTPC, has filed draft documents with capital markets regulator Sebi to raise Rs 10,000 crore through an initial public offering (IPO). The IPO is an entirely fresh issue of equity shares without an offer for sale (OFS) component, as per the draft prospectus (DRHP).

The renewable energy company said the issue proceeds of Rs 75 billion will be used to repay or prepay part or all of the outstanding loans of its subsidiary NTPC Renewable Energy Ltd (NREL) and a portion will be used for general corporate purposes.

The filing comes at a time when the country’s IPO market is booming, with some 60 major companies having launched the first sale of their shares this year.

NTPC Green Energy IPO: Opening Date

In an interview with CNBC-TV18, NTPC management had earlier said that the company plans to list its renewable energy business by the end of calendar year 2024. Official dates will be announced soon.

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

NTPC Green Energy: Maharatna Power Company

NTPC Green Energy is a Maharatna-based public sector undertaking with a renewable energy portfolio that includes solar and wind assets spread across over six states.

As of August 2024, the company’s operational capacity included 3,071 MW of solar projects and 100 MW of wind projects across six states.

Overall, the NTPC Group aims to achieve 60 GW of renewable energy capacity by 2032. It currently has 3.5 GW of installed capacity and over 28 GW under development.

Renewable Energy Situation in India

India’s renewable energy sector is growing rapidly. Globally, India ranks fourth in renewable energy capacity, including wind and solar installations, the draft document said, citing a Crisil report.

Installed renewable energy capacity in the country increased from 63 GW in FY12 to 123 GW in FY21, reaching around 191 GW by March 2024 (including large hydro). As of March 2024, renewable energy accounted for nearly 43 per cent of India’s total generating capacity, with solar leading the growth, it added.

The lead managers for the issue are IDBI Capital Markets & Securities, HDFC Bank, IIFL Securities and Nuvama Wealth Management.

NTPC Green Energy IPO: Experts’ language

“The IPO comes at a time when NTPC, a major thermal power company, is looking at other energy sources to diversify its business and increase revenue,” said Kranthi Bathini, head of equity strategy at WealthMills Securities, according to Reuters.

“Given that green energy will continue to be the focus in the near future, investors will definitely want to grab a piece of this pie,” Bathini added.