The initial public offering (IPO) of NTPC Green Energy continued to see a decent response from the investors during the first day of the bidding process. The issue, which kicked-off for bidding on Tuesday, November 19, ended day one with 35 per cent bidding, thanks to interest from retail investors and QIB bidders.
NTPC Green Energy is selling its shares in the price band of Rs 102-108 apiece. Investors can apply for a minimum of 138 shares and its multiples thereafter. It is looking to raise Rs 10,0000 crore via IPO, which is entirely a fresh share sale of 92,59,25,926 equity shares.
According to the data, the investors made bids for 52,44,90,528 equity shares, or 88 per cent, compared to the 59,31,67,575 equity shares offered for the subscription by 3.25 pm on Thursday, November 21. The three-day bidding for the issue will conclude on Friday, November 22.
The allocation for retail was subscribed 2.24 times, while the portion reserved for non-institutional investors (NIIs) investors saw a subscription of 30 per cent. Portions for employees and shareholders were booked 36 per cent and 94 per cent, respectively. However, the quota set aside for qualified institutional bidders (QIBs) saw bid for 74 per cent as of the time.
Incorporated in April 2022, NTPC Green Energy, promoted by NTPC under Ministry of Power, is a renewable energy company that focuses on undertaking projects through organic and inorganic routes. The company had an operational capacity of 3,071 MW from solar projects and 100 MW from wind projects across six states as of August 31, 2024,
The grey market premium of NPTC Green Energy has taken a big hit amid the rising volatility in the broader market. Last heard, the company was commanding a premium of Rs 0.40 in the unofficial market, suggesting a flat listing for the investors. However, the premium in the grey market stood around Rs 1, on the first day of the bidding.
Brokerage firms have mostly had a positive view on the issue but suggest it for a long-term subscription only. They are positive on the company’s strong parentage, rising demand for renewable energy, long term agreement for the clients, positive cash flows and cash rich nature of the business. However, rich valuations and any turnaround in government policies are its major concerns.
NTPC Green is valued at an EV/EBITDA of 53.6x and EV/MW of 32 times on FY24 basis. As of Sept 30, 2024, NTPC Green operational capacity stands at 3.3GW. The company aims to increase its operational capacity to 6GW/11GW/19GW by FY25E/26E/27E respectively, translating into a CAGR of 87 per cent over FY24-27E basis, said Indsec Research.
“NTPC Group intends to expand its non-fossil-based capacity to 60 GW by 2032. In-place execution capabilities backed by strong parentage, industry growth tailwind and play in Battery Energy Storage System (BESS) augurs well for growth. However, the IPO is aggressively priced. We thereby assign ‘subscribe for long-term’ rating to the IPO,” it said.
NTPC Green Energy allotted 36,66,66,666 shares to anchor investors to mop up Rs 3,960 crore at a price of Rs 108 per share. For the quarter ended on June 30, 2024, NTPC Green Energy reported a net profit of Rs 138.61 crore with a revenue of Rs 607.42 crore. The company clocked a bottomline of Rs 344.72 crore with a revenue of Rs 2,037.66 crore for the financial year 2023-24.
The company has reserved shares worth Rs 200 crore for its eligible employees,, while eligible shareholders of NTPC have shares worth Rs 1,000 reserved for them.75 per cent for the net offer has been reserved for qualified institutional bidders, while non-institutional investors will get 15 per cent of the net offer. Retail investors will have only 10 per cent of the net offer.
NTPC Green Energy is positioned to play a pivotal role in India’s transition to renewable energy, leveraging its status as NTPC Ltd subsidiary. With a solid operating capacity of 3,320 MW in solar and wind projects and a robust pipeline of approximately 22,751 MW, it is well equipped to capitalize on the expected growth in the renewable energy sector, said KR Choksey Finserv.
“India’s renewable energy capacity is projected to grow significantly with estimated solar capacity additions of 137-142 GW and wind power additions of 34-36 GW by FY 2029. Operating EBITDA saw significant increases, maintaining strong margins between 86-90 per cent. NGEL’s established financial track record, coupled with significant growth opportunities,” it said with a ‘subscribe’ tag.
IDBI Capital, IIFL Securities, HDFC Bank and Nuvama Wealth Management are the book running lead managers of the NTPC Green Energy IPO, while Kfin Technologies is the registrar for the issue. Shares of the company shall be listed at both BSE and NSE on Wednesday, November 27.
