NTPC Green Energy IPO 2024 Highlights: Check subscription status, allotment, listing, date, and other key details

The energy demand in India is projected to grow by 5.5-6.0% over the next five years, driven by infrastructure investments, strong economic fundamentals, T&D expansion, and government reforms to enhance the power sector. The average capacity utilization factor (CUF) for solar assets improved from 19% to 24% between FY22- FY24, indicating efficient utilisation & increased power generation.

The retail portion of NITPC Green Energy has been subscribed over 200% as of Day 02 (November 21). The QIBs subscribed the issue 0.79 times and the employees booked it 0.35 times. The other category was subscribed 0.93 times.

“On valuation parse at the upper price band Rs. 108, the issue is asking a Market Cap of Rs 91,000 crore and based on FY25 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 IPO for long term perspective only,” said Rajan Shinde, Research Analyst at Mehta Equities.

IDBI Capital Market Services, HDFC Bank, IIFL Securities and Nuvama Wealth Management handled the work of the book-running lead managers of the IPO.

“At the upper price band of Rs 108, NTPC Green Energy is available at 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 nextgen energy solutions (Battery Energy Storage Systems & Green Hydrogen derivatives), and promising industry outlook,” said Geojit Financial Services in a research note.

Anand Rathi report on the NTPC Green Energy IPO emphasizes the company’s strong position as a leader among public sector units (PSUs) in the renewable power generation sector. The firm boasts a diverse portfolio that includes solar, wind, hydroelectric power, and a growing emphasis on energy storage.

The report highlights NTPC Green Energy as a potential industry leader, particularly as the company focuses on scaling its hydroelectric projects. The company plans significant capacity expansion, aiming to increase its operational capacity from 3.3 GW as of September 2024 to 6 GW by FY25E, 11 GW by FY26E, and 19 GW by FY27E.

The IPO is priced at an upper band of Rs 108 per share, giving the company an estimated market capitalization of around Rs 91,000 crore. The report notes that based on FY25E annualized earnings and the fully diluted post-IPO capital, the price-to-book (PB) ratio stands at 4.96x, while the price-to-earnings (PE) ratio is high at 259.56x, which Anand Rathi describes as “aggressively priced.”

Despite the elevated valuation, the report highlights NTPC Green Energy’s long-term growth potential due to its established capacity, strategic expansion plans, competitive operating costs, and access to low-cost capital backed by its NTPC parent.

Given these strong fundamentals, Anand Rathi recommends a “Subscribe for Long Term” rating for the IPO, citing the company’s favorable position to capitalize on the anticipated growth in the renewable energy sector in the years ahead.

As of 10:27 am on November 21, 2024, the NTPC Green Energy IPO has been subscribed 0.42 times. The Non-Institutional Investors (NII) portion was subscribed 0.21 times, while the Retail segment saw a strong response with a subscription of 1.70 times. The Employee portion was subscribed 0.25 times, and the Reservation portion for shareholders was subscribed 0.72 times. However, the Qualified Institutional Buyers (QIB) portion saw no subscriptions.

The company proposes to utilise the raised money towards investment in the wholly owned subsidiary, NTPC Renewable Energy, for payment of certain outstanding borrowings and other general corporate purposes.

“The company’s focus on maintaining high capacity utilization, operational efficiencies, and low operating costs along with its strong parentage and diversified portfolio helps it to maintain healthy coverage ratios. Further, leveraging NTPC group’s high credit rating and strong balance sheet provides access to low cost of capital,” said Gaurav Garg, Research Analyst at Lemonn.

Shares of NTPC Green Energy IPO were trading at a premium of 0.74% in the grey market. This indicates a lacklustre listing gains for the investors. The grey market is an unofficial place where shares trade illegally ahead of listing.