NTPC Green Energy’s ₹10,000 Crore IPO Debuts Soon: Should You Subscribe?

The NTPC Green Energy IPO, a ₹10,000 crore offering by NTPC Ltd.'s green energy arm, will open for subscription on November 19 and close on November 22. The price band for the IPO is set at ₹102 to ₹108 per share, and investors can bid for a minimum lot of 138 shares or in multiples thereof.

Grey Market Premium (GMP) Insights

Ahead of the IPO opening, the grey market premium for NTPC Green Energy shares stands at ₹1, reflecting a 1% premium over the issue price.

Brokerage Recommendations

SBI Securities: Subscribe for Long-Term Gains

SBI Securities recommends subscribing to the IPO at the upper price band of ₹108, which values the company at a FY24 enterprise value-to-EBITDA ratio of 53.4x post-issue.

• The brokerage highlights NTPC Green Energy’s plans to expand its operational capacity to 6 GW by FY25, 11 GW by FY26, and 19 GW by FY27 from its current 3.3 GW.

• Revenue, EBITDA, and profit are projected to grow at CAGRs of 79.0%, 117.2%, and 123.8%, respectively, over FY24-27.

Reliance Securities: A Strong Long-Term Investment

Reliance Securities also recommends subscribing to the IPO for the long term, citing NTPC Green Energy’s strong financial backing from NTPC, robust credit ratings, and expertise in green hydrogen and energy storage solutions.

• The firm emphasizes the company’s role in achieving India’s net-zero goals while maintaining a prudent growth model.

Key Details of the IPO

Structure of the Issue

• The IPO is entirely comprised of fresh equity shares, with no Offer For Sale (OFS) component.

Reservation:

• 75% for institutional investors.

• 15% for non-institutional investors.

• 10% for retail investors.

• Employees receive a ₹5 per share discount, with ₹200 crore allocated under the employee quota.

• ₹1,000 crore worth of shares are set aside for NTPC shareholders.

Utilization of Proceeds

• ₹7,500 crore will be invested in NTPC Renewable Energy Ltd. (NREL) to repay outstanding borrowings.

• The remaining funds will be used for corporate purposes.

Market Significance

• This IPO ranks as 2024’s third-largest offering after Hyundai Motor India's ₹27,870 crore issue and Swiggy’s ₹11,300 crore IPO.

NTPC Green Energy: Business Highlights

NTPC Green Energy, India’s largest renewable energy public sector enterprise (excluding hydro), operates a diverse portfolio of solar and wind projects with a total capacity of 3,320 MW as of September 2024.

• The company has 13,576 MW of contracted and awarded projects and a pipeline of 9,175 MW.

• NTPC aims to achieve 60 GW of renewable energy capacity by FY32, with 3.5 GW installed and over 28 GW under development.

Lead Managers for the IPO

IDBI Capital Markets, HDFC Bank, IIFL Securities, and Nuvama Wealth Management will serve as the book-running lead managers for this IPO.