NTPC Green Energy Limited, a subsidiary of NTPC Limited, is set to launch its initial public offering (IPO) from November 19 to November 22, 2024. As a promising player in India’s renewable energy sector, the company aims to raise capital to boost its green energy initiatives. Here’s an in-depth look at the IPO's specifics, strengths, financials, and whether it may be a valuable investment opportunity.

IPO Details and Pricing Structure

The NTPC Green Energy IPO is expected to be one of the largest offerings in the renewable energy space this year, targeting an impressive ₹10,000 crore through 925,925,926 shares in a fully fresh issue. Priced between ₹102 and ₹108 per share with a face value of ₹10, this book-built IPO requires a minimum lot size of 138 shares. Retail investors can invest up to ₹193,752, while Small High Net-worth Individuals (S-HNIs) and Big High Net-worth Individuals (B-HNIs) have higher minimum investment amounts, reflecting different tiers for investors.

To encourage participation from employees, NTPC Green Energy is also offering a discount of ₹5 per share, making it an attractive option for those within the organization. Post-IPO, the company's shareholding will see an increase from the pre-issue number of 7,500,000,000 shares to a post-issue total of 8,425,925,926 shares.

Reservation and Allotment Structure

In line with regulatory guidelines, NTPC Green Energy has allocated a majority share (75%) to Qualified Institutional Buyers (QIBs), ensuring that a significant portion is reserved for institutional participants. For retail investors, up to 10% of the net issue is available, with another 15% earmarked for Non-Institutional Investors (NII), commonly referred to as High Net-worth Individuals.

IPO Timeline and Key Dates

The IPO opens on November 19, 2024, and will close on November 22, 2024. The tentative schedule for allotment and listing includes:

• Basis of Allotment: November 25, 2024
• Initiation of Refunds: November 26, 2024
• Credit of Shares to Demat Accounts: November 26, 2024
• Listing Date: November 27, 2024

Investors opting for UPI payment must confirm their mandate by 5 PM on the closing day, November 22, 2024.

About NTPC Green Energy Limited

Established in April 2022, NTPC Green Energy Limited is a wholly-owned subsidiary of NTPC Limited. The company specializes in renewable energy generation, leveraging both organic and inorganic growth strategies. As of August 2024, it operates solar and wind energy capacities totaling 3,171 MW across six states. With an ambitious portfolio of 14,696 MW, the company’s projects include operating, contracted, and awarded initiatives.

NTPC Green Energy has 15 off-takers and runs 37 solar and nine wind projects, with 31 projects currently under construction across seven states. The firm’s competitive advantage lies in its strong connections with off-takers, suppliers, and the significant project execution experience inherited from its parent, NTPC Limited. With a dedicated team of 234 employees and additional contract labor support, NTPC Green Energy is well-positioned for expansion in India’s rapidly growing renewable sector.

Financial Overview and Key Performance Indicators

Financially, NTPC Green Energy has demonstrated robust growth:

• Revenue surged by 1094.19% between March 31, 2023, and March 31, 2024.
• Profit after Tax (PAT) grew by 101.32% in the same period, underlining its profitability.

Financial details for the recent periods show:

• Assets: ₹32,408.30 crore (Sep 2024)
• Revenue: ₹1,132.74 crore (H1 FY2024)
• PAT: ₹175.30 crore (H1 FY2024)
• Net Worth: ₹8,189.18 crore (Sep 2024)

Key ratios also reflect a solid performance:

• ROE: 7.39%
• Debt/Equity Ratio: 1.91
• Return on Net Worth (RoNW): 2.14%
• PAT Margin: 16.2%
• P/BV Ratio: 9.89

These figures highlight a steady financial base, though the high debt-to-equity ratio indicates significant borrowing to support expansion.

Objects of the IPO

The funds raised from the IPO will primarily be utilized for two purposes:

1. Investment in NTPC Renewable Energy Limited (NREL) for repayment or prepayment of certain borrowings.
2. General Corporate Purposes to strengthen its balance sheet and operational flexibility.

Competitive Strengths

NTPC Green Energy benefits from its association with NTPC Limited, a recognized leader in India’s energy sector. The company enjoys access to NTPC’s deep expertise in large-scale project execution and strong supplier relationships. Additionally, its growing renewable energy portfolio of over 14,000 MW and ongoing projects provide a competitive edge in the renewable sector. With a focus on green energy, NTPC Green Energy aligns with India’s broader goals for sustainable energy, enhancing its appeal to environmentally conscious investors.

Investment Considerations

The NTPC Green Energy IPO offers investors exposure to India’s growing renewable energy sector with a reputable promoter. However, there are a few aspects to consider:

• High Debt: The debt-to-equity ratio of 1.91 is relatively high, reflecting considerable leverage that could impact profitability if revenue growth doesn’t keep pace.
• High P/E Ratio: With a pre-IPO P/E of 234.97 and post-IPO P/E of 259.56, NTPC Green Energy appears overvalued compared to traditional energy companies, potentially deterring conservative investors.

Conclusion

NTPC Green Energy’s IPO presents a promising opportunity, especially for those looking to invest in India’s renewable energy sector. With backing from NTPC Limited and substantial project experience, the company is strategically positioned for growth. However, the high P/E ratio and leverage might be factors of caution for some investors. Potential investors should weigh the sectoral growth potential and NTPC Green’s strategic strengths against the financial risks involved before deciding to subscribe.

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