350% Returns, 30% Dividend: Multibagger Navratna PSU Stock In Focus On IPO Plans Of Subsidiary; BUY?

NLC India Limited, a Navratna public sector undertaking, is gearing up to take a step in its renewable energy journey. The company plans to launch an initial public offering (IPO) for its wholly-owned subsidiary, NLC Indian Renewables, by the first quarter of the financial year 2025-26. This move is part of a broader strategy to significantly increase its renewable energy capacity from the current 1.4 GW to 6 GW by 2030.

Prasanna Kumar Motupalli, Chairman and Managing Director (CMD) of NLC India, revealed in an interview with PTI that the proceeds from the IPO would be dedicated to expanding the company's clean energy initiatives. This expansion is in line with India's broader goal of increasing its renewable energy footprint to mitigate climate change and reduce dependence on fossil fuels.

Motupalli also mentioned that the company is considering securing soft loans from foreign companies and banks to support this expansion. This diversified funding strategy reflects NLC India's focus on sustainable growth and energy diversification.

As of 11:45 am on the National Stock Exchange (NSE), shares of NLC India were trading with gains of nearly 1%, priced at Rs 271.78 per share. The stock has delivered impressive returns, showcasing its strength and investor confidence. Over the past year, NLC India's shares have soared by nearly 130%, marking it as a multibagger stock.

With a market capitalization of Rs 37,425 crore, NLC India is a significant player in the power generation sector. The company is a constituent of the BSE 500 index.

NLC India's Earnings Per Share (EPS) stands at Rs 13.32 on a trailing twelve months (TTM) basis, indicating strong profitability. The EPS is a crucial metric, as it shows how much money the company earns per share of stock, providing insights into its financial health and operational efficiency.

NLC India has consistently delivered strong returns over the past few years. The stock is up by 20% in the past three months alone, outperforming the BSE utilities index, which gained 7.70% in the same period. Over the one- and three-year periods, the stock has returned 129.60% and 347%, respectively.

NLC India Limited, formerly known as Neyveli Lignite Corporation India Limited, operates under the administrative control of the Ministry of Coal, Government of India. The company annually produces about 30 million tonnes of lignite from its opencast mines in Neyveli, Tamil Nadu, and Barsingsar, Rajasthan. This robust production capacity positions NLC India as a key player in India's energy sector.

In addition to its lignite operations, NLC India has been diversifying into renewable energy, aligning with global trends towards cleaner energy sources.

The planned IPO is expected to attract significant investor interest, given the rising importance of renewable energy in India and globally. As NLC India scales up its renewable energy capacity, it will likely enhance its market position and contribute to India's sustainable development goals.

The company's strategy of leveraging both equity markets and foreign loans for funding reflects a balanced approach to financing its growth ambitions. This dual approach not only mitigates financial risk but also provides the necessary capital for large-scale projects.