NTPC Green Energy IPO: Analysts Bullish, Expected Opening in November 2024

NTPC Green Energy IPO : New Delhi, 3 October 2024 – Investors are eagerly anticipating the launch of the NTPC Green Energy IPO, which is likely to open in the first week of November 2024, aiming to raise Rs 10,000 crore. Analysts from leading brokerage firms remain bullish about the offering, seeing significant upside potential for investors. Global brokerage firm Jefferies has highlighted a possible 5-11% increase in NTPC’s stock price based on the stake dilution and the premium of NTPC’s renewable energy (RE) business over its coal operations.

The IPO is expected to attract strong interest due to NTPC Green Energy’s (NGEL) strategic growth in the renewable energy sector, particularly solar and wind power, as India aggressively shifts towards sustainable energy sources. Here’s everything you need to know about the NTPC Green Energy IPO, including analyst recommendations, potential risks, and IPO details.

NTPC Green Energy IPO: Key Highlights

• IPO Size: Rs 10,000 crore
• Opening Date: First week of November 2024 (tentative)
• Company: NTPC Green Energy Limited (NGEL)
• Parent Company: NTPC Limited
• Expected Stake Dilution: 10-15%
• Use of Funds: Debt repayment and general corporate purposes
• Operational Capacity: 3.2 GW (including 3.1 GW solar, 100 MW wind)
• Target RE Capacity by 2032: 60 GW

Analysts’ Recommendations: A Bullish Outlook

Jefferies has given a ‘Buy’ rating on NTPC Green Energy, citing the company’s robust growth prospects in renewable energy. According to their analysis, NTPC Green Energy’s RE portfolio is valued at a 2x premium compared to NTPC’s coal business, which could lead to a 5-11% upside in NTPC’s stock. The company currently operates 3.2 GW of renewable energy capacity and aims to expand this to 60 GW by 2032, marking a 44% compound annual growth rate (CAGR) in capacity.

ICICI Securities has also expressed optimism, assigning a ‘Buy’ rating on NTPC shares, underscoring the company’s potential as a leader in the renewable energy space. According to ICICI, NTPC Green Energy has a well-diversified pipeline of renewable energy projects, including 12 GW of contracted projects under construction and another 11 GW in development.

Recent Projects: Strengthening Renewable Portfolio

NTPC Green Energy has made notable advancements in its renewable energy portfolio:

• Shajapur Solar Project (Madhya Pradesh): 50 MW out of a total 220 MW capacity has been commissioned by NTPC Renewable Energy Limited (NREL), a subsidiary of NTPC.
• Shambu ki Burj-2 Solar PV Project (Rajasthan): NGEL has successfully commissioned 98.78 MW out of 300 MW of the project.

These projects solidify NTPC’s strong commitment to renewable energy, aligning with India’s goal of transitioning to sustainable energy solutions. NTPC Green Energy’s IPO proceeds will primarily be used to repay or prepay outstanding loans, supporting the company’s renewable growth strategy.

Risks to Watch Out For

While analysts are generally positive, there are a few risks to consider:

1. Under-recovery risk: If NTPC Green Energy underperforms in achieving its ambitious targets, it may affect returns.
2. Execution delays: Any significant delays in completing renewable projects could impact the company’s profitability and growth trajectory.

NTPC Green Energy IPO: What Investors Should Do

For investors looking to maximize their chances of getting shares, NTPC Green Energy’s IPO will include a shareholders’ quota. Individuals holding shares of NTPC Limited at the time of the RHP (Red Herring Prospectus) filing can apply under this category, increasing their likelihood of IPO allotment.

Additionally, analysts recommend purchasing NTPC shares now to be eligible for the shareholders’ quota, offering an advantageous entry into the IPO.

NTPC Green Energy: A ‘Maharatna’ Powerhouse

As a ‘Maharatna’ central public sector enterprise, NTPC Green Energy plays a critical role in India’s renewable energy ambitions. The company’s portfolio includes solar and wind energy projects spread across six states, and NTPC Green Energy is set to drive the group’s efforts toward achieving 60 GW of renewable capacity by 2032.

NTPC Green Energy’s operational portfolio currently stands at 3.2 GW with solar projects comprising 3,071 MW and wind projects contributing 100 MW. The company has a further 28 GW of projects under development, indicating significant growth potential in the years ahead.

India’s Renewable Energy Landscape

India’s renewable energy sector has witnessed exponential growth in the past decade. The country’s installed renewable energy capacity reached 191 GW by March 2024, representing 43% of the nation’s total power generation capacity. Solar energy has been a major driver of this growth, and NTPC Green Energy is positioned to capitalize on the country’s renewable energy surge.

What to Expect from the NTPC Green Energy IPO

The IPO market in India has been thriving, and NTPC Green Energy’s debut comes at a time when investors are looking for opportunities in sustainable energy companies. As the country accelerates its transition to green energy, companies like NTPC Green Energy are expected to play a pivotal role in achieving national goals.

IDBI Capital Markets & Securities, HDFC Bank, IIFL Securities, and Nuvama Wealth Management are the lead managers for the NTPC Green Energy IPO. Roadshows are planned in India and Singapore, attracting both domestic and international investors.

As the NTPC Green Energy IPO approaches, analysts remain optimistic about its potential. With a target of 60 GW renewable capacity by 2032, NTPC Green Energy is well-positioned for long-term growth. Investors should keep an eye on official IPO announcements, including the price band and allotment details, which are expected to be released soon.

For those interested in participating in this renewable energy journey, purchasing NTPC shares ahead of the IPO may enhance allotment chances through the shareholders’ quota.