NTPC Green Energy IPO: The much-awaited Rs 10,000 crore IPO is all set to open on November 19 in the primary market for subscription. Employees, institutional, non-institutional, NTPC shareholders, and retail investors will be able to bid from Tuesday, which will be open till November 22. Notably, anchor investors can bid on November 18, Monday. The latest grey market premium (GMP) hints at a tepid listing on BSE and NSE for NTPC Green.
NTPC Green Energy IPO:
The IPO is purely of fresh issue worth Rs 10,000 crore. Hence, there will be no offer for sale (OFS) by selling shareholders. As per NSE data, up to 98,14,02,869 equity shares will be offered for subscription.
Further, the price band of the IPO is fixed at the lower end of Rs 102 and the upper end of Rs 108 per share. The face value of the equity shares is set at Rs 10 each. There is a discount of Rs 5 per equity share offered to eligible shareholders.
Notably, the bid lot size for the IPO is 138 Equity Shares and in multiples thereof. For retail investors, the maximum amount of investment is Rs 2 lakh. While the maximum subscription amount for eligible employees is Rs 5 lakh.
Up to Rs 200 crore worth of shares will be reserved for eligible employees of NTPC Green Energy for subscription. Also, about Rs 1,000 crore worth of shares will be reserved for subscription to those investors who hold shares of NTPC Ltd. Further, excluding employee reservation and shareholders quota, up to 75% of the remaining IPO size will be allocated to qualified institutional buyers (QIBs), while 15% of the size will be kept for non-institutional investors (NII). The rest of the 10% of the IPO will be kept for retail individual investors (RII).
NTPC Green Energy will launch its IPO for subscription on BSE and NSE on November 19. Bidding will close on November 22, 2024. Further, the bidding for anchor investors is scheduled to take place on November 18, a day before the 100% book-building IPO.
Since the IPO is an entirely fresh issue, NTPC Green Energy will utilise the entire proceeds from the offer. Of the total Rs 10,000 crore size, NTPC Green Energy plans to utilize about Rs 7,500 crore for investment in its wholly owned subsidiary, NTPC Renewable Energy Limited (NREL) for repayment/ prepayment, in full or in part of certain outstanding borrowings availed by NREL. The rest of the proceeds could be used for general corporate purposes or other development.
NTPC Green Energy IPO GMP:
As per Investor Grain, NTPC Green Energy IPO last GMP is ₹1, last updated Nov 18th 2024 12:25 PM. With the price band of 108.00, NTPC Green Energy IPO's estimated listing price is ₹109 (cap price + today's GMP). The expected percentage gain/loss per share is 0.93%.
After the IPO, the basis of allotment of the equity shares will take place on November 25. Further, shares will be credited to eligible investors' demat accounts or investors who did not get eligible will receive their refunds on November 26. Tentatively, the listing will most likely take place on November or November 27.
Should You Subscribe For NTPC Green Energy IPO?
Gaurav Garg, Research Analyst at Lemonn Markets Desk said, in terms of valuation, the IPO is priced aggressively at a P/E ratio of 264x as of FY 2024, which is significantly higher than its peers. Further, the aggressive valuation suggests that the IPO may be suited for only investors with a high-risk appetite and investing for long term (3-5 yrs), GMP indicates minimal listing gains.
"The company has commendable growth potential in a growing sector, its high valuation could pose risks for investors investing with a view of short-term gains, Garg added.
Giving an outlook, SMC Global Securities explained that NTPC Green is a renewable energy company focused on expanding its project portfolio through both organic growth and acquisitions. As of August 31, 2024, it had an operational capacity of 3,071 MW in solar power and 100 MW in wind power across six states. Its total portfolio was 14,696 MW, comprising 2,925 MW of active projects and 11,771 MW of contracted and awarded projects. The company had agreements with 15 off-takers across 37 solar and 9 wind projects.
However, SMC's note added, "NTPC Green's reliance on a small group of utility companies and power purchasers makes it vulnerable to the potential loss or financial instability of these key clients, which could adversely affect its business, financial performance, and overall health. Additionally, the company's success and profitability are heavily dependent on the availability and costs of critical resources such as solar modules, solar cells, wind turbine generators, and other essential equipment for its renewable energy projects."
Further, SBI Securities has recommended to SUBSCRIBE.
As per SBI Securities note, at the upper price band of Rs 108, NTPC Green is valued at FY24 EV/EBITDA of 53.4x on post issue capital. The company will increase its operational capacity to 6/11/19 GW by FY25E/FY26E/FY27E respectively from 3.3 GW as of Sep'24. Basis our back-of-the-envelope calculation, at the upper price band, the issue is priced at FY25E/FY26E/FY27E EV/EBITDA multiple of 35.3x/18.3x/10.1x and EV/MW of Rs 16.8 cr/9.0 cr/5.1 cr respectively.
SBI's note said, "The company has exponential growth potential in the medium term with its Revenue/EBITDA/PAT expected to grow at a CAGR of 79.0%/117.2%/123.8% to Rs 11,250 cr/9,563 cr/1,980 cr respectively over FY24-27E period. We recommend investors to subscribe to the issue at a cut-off price for the long term."
NTPC Green Energy Ltd (NGEL), a wholly owned subsidiary of NTPC Ltd is the largest renewable energy public sector enterprise (excluding hydro energy) in terms of operating capacity as of Sep'24 and power generation as of Mar'24. The company's renewable energy portfolio includes both solar and wind power assets with presence across multiple locations in more than 6 states which helps in mitigating risk of location specific generation variability.
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