The much-anticipated NTPC Green Energy IPO, the renewable energy subsidiary of NTPC, is scheduled to open for public subscription on Tuesday, November 19, 2024. Brokerages and market analysts have expressed a bullish outlook on the offering, broadly recommending investors subscribe for its strong long-term growth potential.
NTPC Green Energy IPO Details
The NTPC Green Energy IPO is structured as a book-built issue, raising Rs 10,000 crore entirely through the fresh issuance of 92,59,25,926 shares. The IPO price band is set between Rs 102-108 per share, with a minimum lot size of 138 shares. Retail investors would need at least Rs 14,904 to bid for one lot, based on the upper end of the price band.
Grey Market Premium Declines
Ahead of the IPO’s launch, NTPC Green Energy’s unlisted shares saw a dip in the grey market premium (GMP). On Monday, the shares were quoted at a premium of Re 1 over the upper end of the IPO price, translating to a modest GMP of 0.93%. This marks a Rs 2 decline from the Rs 3 premium observed on Friday, November 14, 2024, according to sources tracking grey market trends.
Brokerages on NTPC Green Energy IPO
SBI Securities on NTPC Green Energy IPO
According to a report from SBI Securities, the brokerage recommends a long-term subscription to the NTPC Green Energy IPO, highlighting its attractive pricing and growth prospects. At the upper price band of Rs 108, NTPC Green Energy is valued at an FY24 EV/Ebitda multiple of 53.4x based on post-issue capital.
SBI Securities projects a substantial expansion in NTPC Green Energy’s operational capacity, expecting it to rise from 3.3 GW in September 2024 to 6 GW, 11 GW, and 19 GW by FY25E, FY26E, and FY27E, respectively.
The brokerage also forecasts strong financial growth, estimating NTPC Green Energy’s revenue, Ebitda, and PAT to increase at impressive compound annual growth rates (CAGRs) of 79%, 117.2%, and 123.8%, respectively, over FY24-27E.
SBI Securities concludes that “at the upper price band, the issue is attractively priced,” and recommends investors subscribe for the long-term growth potential offered by NTPC Green Energy.
Anand Rathi on NTPC Green Energy IPO
Anand Rathi’s report on the NTPC Green Energy IPO highlights the company as one of the leading public sector units (PSUs) in renewable power generation, with a portfolio that includes solar and wind assets and a growing focus on hydroelectric power and energy storage projects.
The report positions NTPC Green Energy as a future leader in the renewable segment, driven by its ongoing expansion in hydroelectric projects. NTPC Green Energy aims to scale its operational capacity from 3.3 GW as of September 2024 to 6 GW, 11 GW, and 19 GW by FY25E, FY26E, and FY27E, respectively.
The IPO is priced at an upper band of Rs 108 per share, implying a market capitalization of Rs 91,000 crore. Based on FY25E annualized earnings and the fully diluted post-IPO paid-up capital, the issue asks for a price-to-book (PB) ratio of 4.96x and a price-to-earnings (PE) ratio of 259.56x, which Anand Rathi describes as “aggressively priced.”
Despite this, the report emphasizes NTPC Green Energy’s strong positioning for long-term growth due to its established capacity, future expansion plans, low operating costs, and strategic access to lower-cost capital owing to its NTPC parentage.
Given these factors, Anand Rathi recommends subscribing to the IPO with a “Subscribe for Long Term” rating, seeing NTPC Green Energy as well-positioned to capitalize on the growth in renewable energy capacity in the coming years.
Bajaj Broking on NTPC Green Energy IPO
According to Bajaj Broking’s report, investors are recommended to subscribe to the NTPC Green Energy IPO with a long-term outlook. The report notes a strong financial performance, with the company’s total income and net profit rising sharply over recent years.
NTPC Green Energy reported total income of Rs. 170.63 crore and a net profit of Rs. 171.23 crore for FY23. This grew significantly in FY24, with total income reaching Rs. 2,037.66 crore and net profit increasing to Rs. 344.72 crore.
In the first half of FY25, ending September 30, 2024, NTPC Green Energy achieved a net profit of Rs. 175.30 crore on a total income of Rs. 1,132.74 crore. Bajaj Broking points out that the FY23 profits included a deferred tax credit of Rs. 118.68 crore.
For valuation, the IPO’s asking price equates to a price-to-earnings (P/E) ratio of 257.14 based on projected FY25 earnings, and a P/E ratio of 263.41 based on FY24 earnings, which Bajaj Broking describes as “aggressively priced.”
Nonetheless, the company’s established and expanding capacities position it well for long-term growth, with no anticipated impact from U.S. renewable energy policies, as NTPC Green Energy’s operations are solely within India.
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