Upcoming IPO: NTPC Green Energy Gets SEBI Approval For Rs 10,000 Crore Public Issue; Buy Or Not?

NTPC Green Energy, the renewable energy subsidiary of NTPC Ltd, is set to make a market debut with its initial public offering (IPO) aiming to raise Rs 10,000 crore. Following SEBI's final observation on the IPO documents submitted on September 18, 2024, NTPC Green Energy is now cleared for this entry. As a major public sector player in the renewable energy sector, NTPC Green's IPO is anticipated to draw significant interest.

NTPC Green Energy

According to a CRISIL report referenced in NTPC Green's draft red herring prospectus (DRHP), the company is the largest public sector entity in renewable energy (excluding hydro) by operating capacity and power generation for Fiscal 2024. As of June 30, 2024, NTPC Green was actively collaborating with 15 off-takers through 37 solar and 9 wind projects, while also managing 31 ongoing renewable projects across 7 states, with a total capacity of 11,771 MW contracted and awarded. NTPC Green Energy operates 2,925 MW across 14 solar and 2 wind projects.

IPO Structure and Proceeds Utilization

The NTPC Green Energy IPO has a face value of Rs 10 per equity share and is composed entirely of fresh equity shares. The company has earmarked a specific portion of shares for its qualified employees, who will also benefit from a discount under the employee reservation scheme.

The proceeds from the IPO, totalling Rs 7,500 crore, are allocated strategically for investments in NTPC Renewable Energy Limited (NREL), addressing existing debt related to NREL, and fulfilling general corporate expenses. Through this funding, NTPC Green aims to enhance its renewable energy assets and improve financial stability.

Leading the management of this IPO are IDBI Capital Markets & Securities Limited, HDFC Bank Limited, IIFL Securities Limited, and Nuvama Wealth Management Limited. Meanwhile, KFin Technologies Limited will act as the registrar for the offering.

The company's revenue increased by 46.82% from Rs 910.42 crore in Fiscal 2022 to Rs 1,962.60 crore in Fiscal 2024. Even more striking is the 90.75% compound annual growth rate (CAGR) in profit after tax, rising from Rs 94.74 crore in Fiscal 2022 to Rs 344.72 crore in Fiscal 2024. In the latest quarter ending June 30, 2024, the company reported revenue from operations of Rs 578.44 crore, with a profit after tax of Rs 138.61 crore on a restated basis.

The IPO arrives at a time when India is ramping up its renewable energy initiatives to meet ambitious climate goals. NTPC Green Energy, with its wide-reaching portfolio and significant revenue growth, is expected to play an instrumental role in this transformation. The funds raised through this IPO will empower the company to strengthen its renewable assets and reduce dependency on debt.