NTPC Green Energy IPO: The ₹10k-Cr offering with a price range of ₹102–₹108

IPO Details:

Offer Amount: Rs 10,000 crore
IPO Price: Rs 102–Rs 108 per share
Lot Size: Minimum lot size 138 shares aggregating Rs 14,904 and the bids could be placed in multiples of this lot size.
Offer Type: 100% Equity Issue (no offer for sale).

Investor Categories:

10% – Retail
15% – Non-Institutional
75% – Institutional Investor/EIB.

Subscription Dates:

Date From: Tuesday, November 19
Date Till : Friday, November 22
Share Allocation Date: Monday, November 25
Refunds for unsuccessful bidders: Wednesday, November 26
Shares Listed on BSE and NSE: Thursday, November 27

Utilization of IPO Proceeds:

The funds are for general corporate purposes, and to repay debt for NTPC Renewable Energy Ltd. (NREL), a fully-owned subsidiary of NTPC Ltd.

 

Summary of Key Dates:

 IPO Open: Nov 19–Nov 22
Share Allotment: Nov 25
Refunds from Failed Bidders: Nov 26
Listing on BSE/NSE: Nov 27

NTPC Green Energy Ltd. (NGEL) is the wholly-owned subsidiary of India’s largest power utility company, NTPC Ltd. This IPO is an exciting step for NTPC as it expands its portfolio and reiterates its commitment towards renewables, a sector that promises to grow exponentially for the next few decades. Here’s a deeper dive into the key elements of this IPO:

 

Key Highlights :

• IPO Size and Structure: Total Issue Size is ₹10,000 crore issued only through new equity shares. This is a very large issue, reflecting the ambition of NTPC Green Energy to tap into India’s fast-growing renewable energy sector.

 

• Price Band: ₹102–₹108 per share, thus an offering that is accessible to a wide cross-section of retail investors.
  The reason there is no OFS is because the entire issue proceeds are directly going into the pocket of the company, thereby making its balance sheet very strong.
  

 

• Fund Utilization: A good deal of the amount raised through the IPO would be directed to general corporate purposes as well as debt reduction for NTPC Renewable Energy Ltd. The debt reduction in this aspect is being targeted with considerable more effort, which is perceived by investors as an initiative to build financial stability for the company as  well as to encourage further investments in renewable energy projects. Some of the funds raised would also be deployed to strengthen the company’s capability  of completing continuous as well as future projects for solar and wind power, which are part of the Indian energy transition.

 

• Market Capitalization Post-IPO: Following the IPO, the NTPC Green Energy’s market capitalization would be ₹91,010 crore. Such a high valuation of a  of a renewable company is quite heavy and reflects the faith the market has in India’s forward march towards green energy. The valuation speaks to the tremendous future growth opportunities in the renewable energy market in India, fueled by    government policies, growing corporate demand for sustainability, and increasing energy needs of the country.

 

Company‘s Business Model and Operations

NTPC Green Energy is involved in the renewable energy segment with focus on solar and wind energy projects across India. It is shifting its focus away from the traditional power generation business toward sustainable energy sources; its net-zero  emission goals align with those of India.

Renewable Energy Assets

As of August 31, 2024, NTPC Green Energy has developed a robust pipeline of renewable energy assets:

• 100 MW of Wind Projects:  This is relatively small today, but it will increase significantly in the future since the amount of  wind in India‘s energy mix will be much more important.
• 3,071 MW of Solar Projects: One of the major strengths is that NTPC Green expands the solar energy on which the renewable energy strategy of India is constructed. Based on this positive trend and government policies and incentives given for solar development, capacity in solar power shall be enhanced over the next several years.
  

 

NTPC Green Energy has offices spread across more than six Indian states and offers a diversified geographical footprint that would mitigate risks pertaining to local regulations or weather conditions. It is well positioned to benefit from India’s aggressive plans to enhance renewable energy capacity to 500 GW by 2030.

 

Investment Rationale

1 Government Focus on Renewable Energy:

•  The Indian government has set a very ambitious target of achieving 500 GW of non-fossil fuel capacity by 2030. NTPC Green Energy has got great support with NTPC Ltd. behind it.

• Government Incentives:Governments have provided all incentives like subsidies, in the form of subsidies for projects that generate solar and wind energy.

 

2 Strong Parent Company: NTPC Ltd.

• The Parent company, NTPC Ltd. has a very healthy financial muscle coupled with long years of operating experience. NTPC is the largest power generating company in India, and foray into the green energy space has further enhanced the credibility and stability for NTPC Green Energy.
  

• NTPC stands out strong on its promise to sustainability with a growing reneable energy portfolio hence NTPC Green Energy is well placed to exploit the said resources.

 

3 Strong Market Demand for Renewable Energy

• Electricity is burgeoning fast in India. The whole focus of the government currently-on environmental concerns-is shifting towards renewable energy, which also implies an upsurging trend on the demand side of consumers.
  

• The cost of renewable technology is reducing constantly, and the potential for wind and solar energy is increasing, especially the viability of business models like NTPC Green Energy.

 

4 Deleveraging Strategy

• Application of IPO Proceeds Based on the stated strategy, the company should be able to utilize IPO proceeds in order to repay debt, which would subsequently improve the company’s debt-to-equity ratio, hence making it more financially robust and at a better position to fund any further growth in renewable energy infrastructure.

 

5 Growth Potential

• NTPC Green Energy should take advantage of this trend by increased demand in green power within India and globally  considering the ever-increasing global shift towards cleaner sources of energy.
• With most of its future growth expected to come from scaling up its solar and wind energy capacity, the company is looking at volatile markets with a positive long-term view for renewable energy.
  

 

Risk Factors: 

1. Execution Risk: The success of execution of its renewable energy projects is crucial. Delays or cost overruns in the construction of projects may have an impact on profitability.
2. Regulatory and Policy Risks: The Indian government has a very aggressive policy for renewable energy; changes in policy or regulations may impact the business of NTPC Green Energy.
3. Competition:The competition in the renewable energy segment in India is stiff. A large number of companies are looking to acquire market share, and one needs to differentiate NTPC Green Energy from the rest through execution, efficiency, and scale to remain ahead in the business.
4. Weather Dependence: Renewable energy harvested through sources such as solar and wind depends on weather. In this respect, bad weather or climate alteration may impact output.

Comparison with Sector Companies

Given the performance of other key players in India‘s renewable energy space, including Adani Green Energy, Renew Power, and Tata Power, the green energy theme has seen significant investor interest as the respective equities of the companies have delivered fairly sizeable returns in recent years. The listing of Swiggy also reveals the fact that the investors are interested in high-growth emerging sectors. The aggressive growth of NTPC Green Energy coupled with the strong backing by NTPC is a plus.

Conclusion: Would This IPO Be an Investment Opportunity?

This NTPC Green Energy IPO would be an excellent opportunity for an investor who wants to bank on India‘s fast- emerging  renewable energy sector. The strength of this company comes from a solid platform supported by a very impressive parent company NTPC Ltd., along with the impressive pipeline of projects that the company enjoys and the emphasis of government government on clean energy, which makes this a very promising long-term investment opportunity.

NTPC Green Energy would, of course, carry all the risks common to any IPO – market volatility, execution challenges, and regulatory shifts. However, investors must balance those risks with potential rewards and investment objectives before subscribing.

For a long-term view and an interest in sustainable energy, participation in India’s clean energy transition through  NTPC  Green Energy could be very attractive.

 

Disclaimer: The opinions and investment advice provided by Finaffair experts are their own and do not reflect the views of the website or its management. Finaffair encourages users to consult qualified professionals before making any investment decisions.