Last Updated:November 19, 2024, 17:23 IST

Unlisted shares of NTPC Green Energy Ltd continue to trade Rs 0.70 higher or at 0.65 per cent premium in the grey market over the issue price of Rs 108 apiece.

NTPC Green Energy IPO.

NTPC Green Energy IPO: The NTPC Green Energy IPO witnessed a lukewarm start on its opening day, November 19. According to BSE data, the IPO received bids for a total of 5,10,35,160 shares, representing 30% (or 0.30 times) of the total issue size of 9,80,39,215 shares.

Key Highlights Of Day 1

• Retail Individual Investors: Oversubscribed significantly, with bids for 10,79,05,512 shares, marking a 125% subscription.
• Shareholder Quota: Lukewarm response, with bids for 5,20,20,342 shares, translating to a 53% subscription.
• Non-Institutional Investors: Subscribed to 13% of their allocated quota with bids for 1,63,72,044 shares.
• Qualified Institutional Buyers: Showed minimal participation on day one.

NTPC Green Energy IPO Details

The price band of the much-awaited IPO has been fixed in the range of 102-Rs 108.

The Rs 10,000-crore IPO will be closed on Friday. The IPO allotment will be finalised on November 25, while its listing will take place on November 27.

NTPC Green Energy IPO GMP Today

According to market observers, unlisted shares of NTPC Green Energy Ltd continue to trade Rs 0.70 higher at Rs 108.7 apiece in the grey market. The Rs 0.70 GMP is just a 0.65 per cent premium over the issue price of Rs 108 apiece. It signals a subdued interest in the IPO.

The GMP is based on market sentiments and keeps changing. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.

NTPC Green Energy IPO: Shareholders’ Quota

Shareholders of its parent entity NTPC Ltd will have an upper edge in the much-awaited offering as they have 10 per cent quota. According to the red herring prospectus (RHP), Rs 1,000 crore of the Rs 10,000-crore IPO will be reserved for NTPC’s shareholders and any investor holding even one share of NTPC will be eligible to apply under the shareholder quota, thus increasing chances of the IPO allotment.

According to the RHP, “equity shares with a face value of Rs 10 each will be allocated to eligible shareholders on a proportionate basis, with this reserved portion not exceeding 10 per cent of the total issue size.”

NTPC Green Energy IPO Shareholders’ Quota: Who Are Eligible?

Under this, investors holding NTPC’s shares in their demat account as of the RHP filing date — November 13 — will be able to apply for the NTPC Green Energy IPO under the 10% shareholder quota.

Shares of NTPC Ltd were trading lower by 2.28 per cent at Rs 364 apiece on the BSE on Monday, a day before the NTPC Green Energy IPO.

NTPC Green Energy IPO: Should You Apply? Analysts’ Recommendations

Most brokerages have given ‘subscribe for long term’ recommendations for the IPO.

SBI Securities in its IPO note said, “NGEL has a large portfolio of utility-scale solar and wind energy projects coupled with projects for PSUs and Indian corporates. The company along with the NTPC Group have a strong track record of developing, constructing and operating renewable power projects, driven by experienced in-house management and procurement teams.”

At the upper price band of Rs 108, NGEL is valued at FY24 EV/EBITDA of 53.4x on post issue capital. The company will increase its operational capacity to 6/11/19 GW by FY25E/FY26E/FY27E respectively from 3.3 GW as of September 2024. Basis our back of the envelope calculation, at upper price band, the issue is priced at FY25E/FY26E/FY27E EV/EBITDA multiple of 35.3x/18.3x/10.1x and EV/MW of Rs 16.8 cr/9.0 cr/5.1 cr respectively. The company has exponential growth potential in medium term with its Revenue/EBITDA/PAT expected to grow at a CAGR of 79.0%/117.2%/123.8% to Rs 11,250 cr/9,563 cr/1,980 cr respectively over FY24-27E period.

“We recommend investors to subscribe to the issue at cut-off price for long term,” SBI Securities said in the note.

Another brokerage firm Reliance Securities also granted a ‘subscribe for long term’ rating to the IPO.

It said NGEL benefits from NTPC’s financial strength and long-term relationships with off takers and suppliers, growing its revenues along with strong credit ratings that enable a low cost of debt executing large scale projects. NGEL has deep domain expertise of the management team focusing on new energy solutions like green hydrogen, green chemicals and storage with prudent growth and contributing towards fulfilling India’s net zero goals.

“We believe with a prudent business model and strong earnings growth with improved financials and return ratios, we recommend a Subscribe to the issue for the long term,” Reliance Securities said.

Kranthi Bathini, director of equity strategy at WealthMills Securities, has said the IPO comes at a time when thermal power-heavy NTPC is looking for other energy avenues to diversify into and bolster revenues,” .

“Considering the fact that green energy will remain in focus in the near future, investors would definitely want a slice of this pie, “Bathini added.

NTPC Green Energy IPO: More Details

The IPO is entirely a fresh issue of up to Rs 10,000 crore with no offer for sale component. A discount of Rs 5 per equity share is being offered to eligible employees bidding in the employee reservation portion.

The IPO will remain opened between November 19 and November 22. The allotment is scheduled to be finalised on November 25, while the listing will take place November 27.

The proceeds from its fresh issuance will be utilised to the extent of Rs 7 500 crore for investment in its wholly-owned subsidiary, NTPC Renewable Energy Limited (NREL) for repayment/ prepayment, in full or in part of certain outstanding borrowings availed by NREL and general corporate purposes.

NTPC Green Energy is the largest renewable energy public sector enterprise (excluding hydro) in terms of operating capacity as of September 30, 2024 and power generation in Fiscal 2024, according to a CRISIL Report, November 2024.

As of September 30, 2024, its portfolio consisted of 16,896 MWs including 3,320 MWs of operating projects and 13,576 MWs of contracted and awarded projects. NTPC Green Energy’s revenue from operations has grown at a CAGR of 46.82 per cent from Rs 910.42 crore in Fiscal 2022 (on a special purpose carved-out basis) to Rs 1,962.60 crore in Fiscal 2024 (on a restated basis).