The NTPC Green Energy IPO is set to open for subscription on Tuesday, November 19, and close on Friday, November 22, 2024. The renewable energy company's IPO is a book-built issue worth Rs 10,000 crore, comprising a fresh issue of 92.59 crore shares. The price band for the IPO has been set at Rs 102-108 per share, with a minimum lot size of 138 shares. For retail investors, the minimum investment required is Rs 14,076.
NTPC Green Energy IPO Grey Market Premium (GMP)
Ahead of the IPO, the grey market premium (GMP) for NTPC Green Energy shares was around Rs 1 per share, reflecting a 1% premium over the issue price. Based on the upper price band of Rs 108, the shares are expected to be listed at Rs 109 per share, offering a potential gain of 0.93%.
Valuation and Recommendations
At the upper price band, NTPC Green Energy is valued at 53.4x post-FY24 Enterprise Value to EBITDA (EV/EBITDA). Analysts recommend subscribing to the issue at the cut-off price for long-term gains. The company plans to expand its operational capacity from 3.3 GW in September 2024 to 6 GW, 11 GW, and 19 GW by FY25, FY26, and FY27, respectively.
Also Read | NTPC Green Energy IPO: Rs 10,000 Crore Issue, Check GMP Price and Other Details.
According to Brokerage Calculations, at the Upper Price Band:
The issue is priced at EV/EBITDA multiples of 35.3x, 18.3x, and 10.1x for FY25E, FY26E, and FY27E, respectively.The EV per megawatt (MW) is Rs 16.8 crore, Rs 9.0 crore, and Rs 5.1 crore for the same periods. The company's revenue, EBITDA, and profit are projected to grow at a CAGR of 79.0%, 117.2%, and 123.8%, respectively, reaching Rs 11,250 crore, Rs 9,563 crore, and Rs 1,980 crore by FY27E.
Strengths and Outlook
Reliance Securities highlighted NTPC Green Energy's financial strength, long-term relationships with off-takers and suppliers, and a strong credit rating, enabling lower debt costs for large-scale projects. The company also benefits from an experienced management team focused on new energy solutions, such as green hydrogen, green chemicals, and energy storage, contributing to India's net-zero goals.
The brokerage stated, "With a prudent business model, strong financial position, superior return ratios, and robust earnings growth, we recommend subscribing to the issue for the long term."
Company Background and Use of Funds
NTPC Green Energy Limited, a wholly-owned subsidiary of NTPC Limited, focuses on renewable energy projects developed organically and inorganically. Proceeds from the IPO will be used to:
Invest in its wholly-owned subsidiary, NTPC Renewable Energy.Repay debt.Fund other corporate purposes.Financial Performance.The company's revenue from operations grew at a CAGR of 46.82%, from Rs 910.42 crore in FY22 to Rs 1,962.6 crore in FY24. Profit after tax increased at a CAGR of 90.75%, from Rs 94.74 crore in FY22 to Rs 344.72 crore in FY24.
IPO Allocation and Listing Details
75% of the public offering is reserved for Qualified Institutional Buyers (QIBs).15% is allocated for Non-Institutional Investors (NIIs).10% is reserved for retail investors.The final share allotment will be announced on November 25, 2024, and the company's shares are expected to list on the stock exchanges on November 27, 2024.