NTPC Green Energy Ltd

About NTPC Green Energy IPO:

NTPC Green Energy is an IPO of ₹10,000 crores. It consists of a fresh issue of 8,14,81,482 crores. The IPO will open on Nov 19,2024 and close on Nov 22,2024. Anchor bidding will take place on Nov 18, 2024 and shares will be credited on Nov 25, 2024. The initiation of refunds will take place on Nov 26, 2024.

Anchor investors:

The anchor investor bid opens and ends on Nov 18, 2024. The company may allocate up to 60% of the QIB portion to anchor investors, out of which one third will be allocated to Mutual Funds.

Book running lead managers:

NTPC renewable energy has four main book running lead managers:

IDBI Capital
HDFC Bank
IIFL Capital
Nuvama

Retail and HNI application:

The retail portion of the NTPC Green Energy IPO consists of not less than 92592592.6 shares of face value of ₹1. Not less than 10% of the net offer is for retail individual bidders

About company:

NTPC Green Energy is a wholly owned subsidiary of NTPC Limited, a ‘Maharatna’ central public sector enterprise. They are the largest renewable energy public sector enterprise (excluding hydro) in terms of operating capacity as of June 30, 2024 and power generation in Fiscal 2024. (Source: CRISIL Report, September 2024).Their renewable energy portfolio encompasses both solar and wind power assets with presence across multiple locations in more than six states which helps mitigate the risk of location-specific generation variability. (Source: CRISIL Report, September 2024).

Business Model:

NTPC Green Energy secures contracts for supplying solar and wind energy from different states within the country. As of FY24, renewable energy accounted for 96.94% and 97.19% of their revenue from operations.

Growth Trajectory:

The company’s revenue increased by 1094.19% compared to the same period last year. The company’s profit after tax rose by a whopping 90.75%. The company has a huge pipeline of projects with 5.9GW being built currently. In addition, the state-held renewable energy giant is also exploring new areas such as green hydrogen, green ammonia and energy storage systems.

Market Position:

As of September 30, 2024 the company is the largest renewable energy public sector enterprise in terms of operating capacity and power generation(Source: CRISIL Report, November2024). As of September 30, 2024, their ‘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 IPO Key Points

Objectives of the IPO:

The renewable energy giant is coming out with an IPO to fulfill two main purposes:

1. Invest in their wholly owned Subsidiary, NTPC Renewable Energy Limited (NREL) for repayment/ prepayment, in full or in part of certain outstanding borrowings availed by NREL

2. General corporate purposes.

Subscription Details:

Qualified Institutional Buyers: 75%

Non-Institutional Investors: 15%

Retail: 10%

Potential benefits for investors:

• The renewable energy industry is rapidly growing with significant thrust being given by the Government and NTPC has a huge pipeline of orders owing to these two reasons. By investing in NTPC Green Energy IPO, investors get to be a part of a fast growing, sustainability-driving sector of the country.

• NTPC is the largest state-owned renewable energy company in the country. The company has huge capacity, a huge pipeline of orders, support of the parent NTPC Company and remarkable growth in the last few years. By investing in NTPC Green Energy, the investor gets to be a part of strong, rapidly growing company that is making huge strides to turn this planet into a greener one.

NTPC Green Energy IPO Risk Factors

• The company derived a significant portion (more than 87%) of their revenue from operations from their top five off-takers in Fiscal 2024, with their single largest off-taker contributing around 50%of our revenue from operations in Fiscal 2024. Loss of any of these customers or a deterioration of their financial condition could hurt their business.

• The company’s business and profitability is substantially dependent on the availability and cost of solar modules, solar cells, wind turbine generators , third party suppliers and other materials, components and equipment for their solar, wind and 31 other projects. Any significant cost overruns or project delays can hurt their business.

• Their operating renewable energy projects are concentrated in Rajasthan. Any significant social, political, economic or seasonal disruption, natural calamities or civil disruptions in Rajasthan could hurt their business.

Key Strategies of NTPC Green Energy

Continue to grow project pipeline through prudent bidding and strategic joint ventures with PSUs and private corporates.

• Focus on projects in new energy solutions like green hydrogen, green chemicals and storage

• Continue to contribute to India’s sustainability efforts

Conclusion

NTPC Green Energy Limited is a company with a strong customer base, a strong pipeline of projects and strong support from the parent company and the government. If you want to invest in the IPO, make sure you thoroughly assess the risks and strengths, your financials goals and your risk appetite.