As per reports, there is a potential deal between Malaysia’s Petronas and NTPC’s RE arm. Petronas is said to be offering $460 mn for a 20% stake in NTPC’s RE arm. At the end of the Q3 of FY2022-23, the company had commissioned approximately 2.9 GW of RE capacity and had 4.7 GW under construction. This represents around 6% of the company’s estimated overall capacity for the FY2023-24. The speculated deal would imply a price of approximatelyRs 12.5 per share for NTPC shareholders after a 20% holdco discount, compared to the current market capitalisation of aroundRs 10.8 per share. This would represent value accretion of approx.Rs 1.7 per share.
Focus on RE remains a top priority. Also there is clear visibility on 9 GW of the planned 60 GW target by 2032, including projects that are in the award stages.
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The mgmtvhas mentioned that 24 GW of ultra mega RE park is under various stages and includes 10 GW of Rajasthan. Interest costs are a key differentiating factor that could help NTPC achieve the same equity IRR (internal rate of return) as its competitors, even if it bids at tariffs that are 10-15% lower. We highlighted in ‘India Power: Decade of growth ahead’, dated 18 July 2022, that NTPC