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NTPC Green Energy Limited (NGEL), a wholly owned subsidiary of NTPC Limited, is set to debut its ₹10,000 crore initial public offering (IPO) on November 19, closing on November 22. Priced in a range of ₹102 to ₹108 per share, the IPO represents a key step in NTPC’s strategy to shift toward cleaner energy sources.
The proceeds from the offering, entirely a fresh issue, will be primarily used for debt repayment of NTPC Renewable Energy Ltd and other general corporate purposes. Post-issue, the public shareholding in NGEL will range from 10.99% to 11.6%, depending on the final pricing.
Observations by Ventura Securities
NGEL has an operational capacity of around 3.3 GW (Solar – 3.2 GW and Wind – 0.1 GW) and projects awarded and contracted add up to 13.6 GW as of September 2024, with a target to reach 60 GW of non-fossil capacity by FY32.
The offering aligns with NTPC’s commitment to achieving 60 GW of renewable capacity by 2032, a goal underpinned by India’s broader renewable energy policies. However, the company’s reliance on state utilities for a significant portion of its revenues remains a potential risk, as noted by Ventura Securities.
Key initiatives include developing battery storage and renewable energy projects round the clock. The company will also develop green hydrogen hub at Pudimadoka. Its focus is also on the RE park in Maharashtra and GH2 production in Rajasthan.
‘Financials and valuation’
In FY24, NGEL reported revenue of ₹1,962.6 crore, with an EBITDA margin of 88.9%. Analysts project steady capacity growth, supported by operational efficiencies and long-term power purchase agreements. Ventura Securities highlights the company’s growth prospects while noting a relatively high FY24 EV/EBITDA valuation multiple of 46.5x at the upper price band.
‘Risks and recommendations’
Key risks include dependency on government utilities for revenue, cost volatility in renewable energy components, and execution challenges for upcoming projects. The company’s geographic concentration in Rajasthan, where over 60% of its capacity resides, also poses a risk.
Ventura Securities advises investors to subscribe to the issue.
(This article was generated using AI to extract details from the brokerage’s report and was reviewed by a journalist)
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