NTPC Green Energy IPO Day 1: Bidding Opens, Price Bands Rs 102-108; Subscribe Or Avoid, What Experts Say?

NTPC Green Energy IPO: The Rs 10,000 crore initial public offering (IPO) of NTPC Green Energy has opened from Tuesday onward. The bidding will close on November 22. The price bands for subscribing to the IPO range from Rs 102 to Rs 108. The majority of brokerages have recommended 'Subscribe' on the IPO.

NTPC Green Energy IPO Day 1:

In less than 1 hour of the opening of the IPO, NTPC Green Energy received up to 10% subscription with bids of 5,81,05,452 equity shares against its offered size of 59,31,67,575 equity shares, as per the stock exchanges data.

So far, among investors, retail individual investors (RII) have shown a strong response with 42% subscription against the portion reserved for them. Other categories like qualified institutional buyers (QIBs), non-institutional investors (NIIs) and employee reservation quotas have shown healthy responses in the start.

NTPC Green Energy IPO Details:

The IPO opened on November 19 and will close on November 22. The 100% book building is purely a fresh issue worth Rs 10,000 crore of equity shares. The price band is fixed at the lower end of Rs 102 to Rs 108 per equity share. There is a discount of Rs 5 per equity share offered to eligible shareholders. The face value is Rs 10 per share. The bid lot size is 138 Equity Shares and in multiples thereof.

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).

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.

Should You Subscribe to NTPC Green Energy IPO?

Geojit On NTPC Green Energy IPO:

At the upper price band of ₹108, NGEL is available at a P/Bv of 4.9x (on FY25E annualised financials), which appears to be fairly priced. We assign a "Subscribe" rating for the issue on a long-term investment basis, considering its strong brand recall, superior execution capabilities, portfolio expansions, investment in next-generation energy solutions (Battery Energy Storage Systems & Green Hydrogen derivatives) and promising industry outlook.

Rajan Shinde, Research Analyst, Mehta Equities On NTPC Green Energy IPO:

We believe NTPC Green Energy Ltd IPO brings investors an opportunity to invest in a leading player in India's renewable energy sector, backed by the formidable resources and expertise of NTPC Ltd. We think with a robust portfolio of 26,071 MW, including operational, contracted and pipeline projects, the company demonstrates strong growth potential. Its focus on long-term Power Purchase Agreements (PPAs) with government and public utilities ensures stable revenue streams, while its diversified geographical presence mitigates risk. We also think NTPC Green's strategic expansion into green hydrogen, green chemicals and battery storage further enhances its growth prospects, positioning it at the forefront of India's energy transition.

By looking at the financials, the company has shown a substantial growth in revenue from operations of 1057% in FY 2024 and net profit by 101% in FY 2024. On valuation parse at the upper price band Rs. 108/-, the issue is asking a Market Cap of Rs. 91000 cr and based on FY 2025e annualised earnings and fully diluted post IPO paid-up capital, the company is asking for a PB of 4.96x and PE of 259.56x which appears aggressively priced. As Supported by NTPC's financial strength and ambitious renewable energy targets, the company is well-equipped to capitalize on the increasing demand for sustainable energy solutions. Hence, looking at attributes we recommend only risk taking investors to "SUBSCRIBE" the NTPC Green Energy Ltd IPO for long-term perspective only.

Divyam Mour, Research Analyst, SAMCO Securities On NTPC Green Energy IPO:

As a subsidiary of NTPC operating in a high-growth segment, the company demonstrates significant future potential, leveraging NTPC's extensive experience in the sector. A peer comparison of key fundamentals presents a favorable image, with the company outperforming its peers in revenue growth, profit margins, and leverage ratios.

However, its capacity utilization factor (CUF), a critical measure of a plant's electricity generation efficiency, is relatively lower for its solar and wind projects compared to competitors. Additionally, an analysis of the company's price-to-earnings (P/E) ratio against its peers indicates overvaluation, raising concerns about its long-term wealth creation prospects. Consequently, investors are advised to avoid the IPO.

Sharekhan On NTPC Green Energy IPO:

At the upper band of issue price, the company is valued at 55.6x its H1FY25 (annualised) EV/EBITDA. The company is well placed to capture the tailwind from capacity addition in renewables owing to its strong parentage (NTPC), diversified capacity portfolio and access to lower cost of capital.

Master Capital Service on NTPC Green Energy IPO:

Renewable energy represents a significant and growing industry in India. Globally, India ranks fourth in total renewable energy, wind as well as solar installations. India has become the second largest renewable energy market in the Asia Pacific region after China. India's Renewable Energy Capacity has increased from 63 GW as of Mar'12 to 201 GW as of Sep'24 driven by various central and state government schemes. NTPC Green Energy Limited is one of the top players in renewable energy players in India and aims to strengthen its position in core solar and wind energy businesses and focus on new geographies and new off-taker customers. The company is also investing in new energy solutions like green hydrogen, green chemicals and storage capabilities and solutions. Investors looking to invest can invest in the IPO for the long term.

As of H1FY25, NGEL's portfolio comprised 16,896 MW, including 3,320 MW of operational projects and 13,576 MW of contracted and awarded projects. Additionally, it has a 9,175 MW capacity in the pipeline, bringing the total capacity to 26,071 MW. NGEL serves 17 off-takers across 41 solar and 11 wind projects and is currently constructing 36 renewable energy projects totalling 13,576 MW in 6 states.