Monday, 18 November 2024
The much-anticipated initial public offering (IPO) of NTPC Green Energy, the renewable energy arm of NTPC, is generating buzz in the market ahead of its opening for public subscription on Tuesday, 19 November 2024. Market analysts and brokerages have largely expressed optimism about the IPO, citing its long-term growth potential. Anchor investor bidding commences today.
Key details of the NTPC green energy IPO
The ₹10,000 crore offering is structured as a book-built issue comprising a fresh issue of 92.59 crore shares. Priced within a range of ₹102-108 per share, the IPO has a lot size of 138 shares, requiring retail investors to invest a minimum of ₹14,904 for one lot.
The subscription period runs from 19 November to 22 November 2024. The basis of allotment will be finalised on 25 November, and shares will be credited to demat accounts on 26 November. NTPC Green Energy is set to debut on the NSE and BSE on 27 November 2024.
IPO registrar and lead managers
KFin Technologies will oversee the IPO as its registrar. The book-running lead managers include prominent names such as IDBI Capital Market Services, HDFC Bank, IIFL Securities, and Nuvama Wealth Management.
Objective of the IPO
According to the Red Herring Prospectus, proceeds from the IPO will be allocated towards:
- Investments in NTPC Green Energy’s wholly-owned subsidiary, NTPC Renewable Energy Limited (NREL).
- Repayment or prepayment of certain borrowings.
- General corporate purposes.
Grey market performance
In the grey market, NTPC Green Energy’s unlisted shares were quoted at a modest premium of ₹1 over the IPO’s upper price band on Monday, reflecting a 0.93% grey market premium (GMP). This marks a decline from the ₹3 premium observed last Friday, 14 November 2024, indicating subdued grey market activity.
Brokerage recommendations
Reliance Securities: Strong Long-Term Prospects
Reliance Securities has given a “Subscribe” recommendation, emphasising the company’s robust financials, solid credit ratings, and expertise in executing large-scale renewable projects. NTPC Green Energy’s focus on innovative energy solutions such as green hydrogen and energy storage aligns with India’s net-zero emissions targets.
“We believe the prudent business model, strong earnings growth, and improved financials justify subscribing to the issue for the long term,” the brokerage stated.
SBI securities: Attractively priced
SBI Securities also recommends subscribing to the IPO, highlighting the company’s potential to achieve significant operational growth. At the upper price band of ₹108, NTPC Green Energy is valued at a FY24 EV/Ebitda of 53.4x, based on post-issue capital.
The brokerage projects operational capacity to rise from 3.3 GW in September 2024 to 6 GW, 11 GW, and 19 GW by FY25, FY26, and FY27, respectively. Revenue, EBITDA, and PAT are expected to grow at impressive compound annual growth rates (CAGRs) of 79%, 117.2%, and 123.8% over FY24-27E.
“At the upper price band, the issue is attractively priced, and we recommend investors subscribe to the issue for long-term growth,” said SBI Securities.
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What makes NTPC green energy IPO appealing?
NTPC Green Energy’s financial health, innovative initiatives, and government backing make it a compelling investment. Its strategic positioning in the renewable energy sector, a cornerstone of India’s sustainability goals, has attracted significant interest from institutional and retail investors alike.
The company’s commitment to expanding its renewable capacity and reducing carbon emissions positions it as a vital player in India’s energy transition. Analysts believe the IPO offers an opportunity to participate in a long-term growth story that aligns with the global shift towards green energy.
While grey market activity shows lukewarm sentiment, the overall outlook for NTPC Green Energy’s IPO remains bullish. Analysts recommend subscribing to the issue for its strong growth potential, supported by robust financials and a forward-looking business strategy. Investors eyeing long-term returns in the renewable energy space may find this IPO an attractive proposition.
As the subscription window opens tomorrow, NTPC Green Energy is set to take a significant step forward in its journey, aligning with India’s renewable energy ambitions and paving the way for sustainable growth.
