NTPC Green Energy IPO: Brokerage is expecting NTPC Green Energy IPO to enter the Indian market during the Q3 of FY25. The subsidiary of NTPC Ltd is expected to add value to the parent company. NTPC is a Maharatna PSU energy stock and is recommended to buy ahead of NTPC Green Energy IPO.
When Will NTPC Green Energy IPO Hit the Indian Market?
As per Antique Stock Broking, the NTPC Green Renewable (NGEL) IPO is in progress and is expected to conclude in 3QFY25E. NGEL is expected to add 3 GW in FY25E; in 1HFY25 it has added 0.4 GW. Catalyst for stock is capacity commissioning in thermal & renewables and valuation benchmark of NGEL in the IPO.
That being said, NTPC, the parent company of NTPC Green Energy, is well-positioned to capitalize on industry power demand growth.
BUY Maharatna PSU NTPC Stock Price?
In its latest report, Antique Stock Broking said, "NTPC's 2QFY25 adj. PAT of INR 42 bn, up 24% YoY, was driven by a) Regulated equity increase of 10% YoY, b) Other income of INR 9 bn, up 43%, and c) Core RoE in the new plan period at 16.3% in 1HFY25 vs. 15.3% YoY. NTPC's thermal under-construction capacity has increased to 11.5 GW vs. 9.5 GW QoQ and it has 12 GW of contracted and awarded projects in renewables."
Further, the brokerage highlighted that the NTPC group's installed capacity is expected to increase by 8%/ 8%/ 11% over FY25E/ 26E/ 27E. Of which, the renewable capacity will increase by 103%/ 84%/ 73% and thermal (standalone/ JV) capacity to increase by 4%/ 2%/ 3% over FY25E/ 26E/ 27E.
Also, the brokerage mentioned that NTPC has 11.2 GW thermal capacity under construction and for future growth thermal awarding of 13.6 GW is expected over 2HFY25 to FY27E. In renewables, it has ~12 GW of projects under construction and it needs to award another 3GW in 2HFY25, to see guided 19 GW installed capacity at NGEL by FY27E."
On the valuation, the brokerage's note added, "We retain BUY on the stock and roll over the TP to FY27E and thus SoTP-based TP is revised to INR 477 (earlier INR 458). The TP implies a valuation of 2.5x FY27 BV."
Currently, NTPC's share price is at Rs 408.90 apiece, with a market cap of Rs 3,96,496.68 crore.
Other Key Details of NTPC Green Energy IPO:
1. The Rs 10,000 crore IPO is expected to be launched later in November. Accordingly, the dates of the IPO, price band, and anchor investors' bidding will be announced in due course.
2. The IPO filed its draft prospectus with Sebi on September 18, 2024. The public offer is purely a fresh issue worth Rs 10,000 crore.
3. The IPO size will be reserved for qualified institutional buyers (QIBs), non-institutional investors (NIIs), retail individual investors (RII) and employees.
4. Booking running lead managers of the IPO are IDBI Capital Markets & Securities, HDFC Bank, IFL Securities, and Nuvama Wealth Management. The registrar of the IPO is KFinTechnologies
5. The proceeds of the IPO will be used 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 investment will be to the tune of Rs 7,500 crore. A portion will be kept for general corporate purposes among others.
6. GMP: The last grey market premium (GMP) on IPO Central for NTPC Green Energy stood at Rs 34 per share. While Rs 6,500 was subject to SAUDA.
7. Price BAND: As per ICICI Direct's website, the price band is likely to be in the range of INR 100-120 per share, depending on market conditions at the time of the listing.
8. After the IPO, the other processes are allotment of shares, initiation of refunds, credit of equity shares, and listing. Proposed equity shares will be listed on BSE and NSE.
NGEL is an umbrella company for the green business initiatives of NTPC and undertakes projects through organic and inorganic routes and aims to be the flag-bearer of NTPC's green energy journey to achieve the ambitious target of 60 GW by FY 32.
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