Due to the listing of NTPC Green Energy, brokerage Elara Capital finds its parent NTPC Ltd, a Maharatna PSU giant, attractive to buy. Elara upped its target price on NTPC to Rs 505 following NTPC Green Energy's listing. The recommendation is BUY. Currently, NTPC trades below Rs 370 and NTPC Green Energy stock is below Rs 145 levels on BSE.
NTPC Green Energy Share Price:
After market hours of December 6th, NTPC Green Energy stock ended at Rs 143.85 apiece, up by 1.9% on BSE with a market cap of Rs 1,21,212.75 crore. The stock is near its 52-week high of Rs 155.30 apiece. Since listing to date, the stock is up by 18%. In the trading week from December 2-6th alone, the stock zoomed by 15% on BSE.
The IPO was an entirely fresh issue worth Rs 10,000 crore and opened on Tuesday, November 19, 2024. Subscription closed on Friday, November 22, 2024. The price band for the Offer was determined at Rs 102 - Rs 108 per equity share. The issue price of the IPO was fixed at Ras 108 apiece. The IPO overall received a subscription of 2.42x.
The IPO is listed at more than a 3% premium on both BSE and NSE. Its listing price stood at Rs 111.60 on BSE, and at Rs 111.50 apiece on NSE.
NTPC Green Energy Outlook:
According to Elara Capital's note, NTPC's green energy subsidiary NTPC Green Energy (NGEL) has successfully listed its IPO, raising INR 100bn to fund new projects and meet capex requirements. With 4,294MW of operational solar and wind capacity supported by 25-year power purchase agreements (PPAs), NGEL aims to add 16GW of renewable energy (RE) in the next three years and achieve 60GW capacity by 2032.
Further, Elara highlighted that NGEL manages a portfolio of solar and wind assets in multiple regions, with 4,294MW of operational capacity and an average PPA tenure of 25 years. It aims to add 16GW of RE within three years to reach 60GW capacity by 2032. The company plans to commission 3GW in FY25, 5GW in FY26, and 8GW in FY27. Strategic MoUs with Rajasthan (25GW) and Maharashtra (10GW) provide a robust pipeline for achieving these goals.
Also, Elara's note said, NGEL is advancing into hydrogen and battery storage technologies. It is developing a green hydrogen hub at Pudimadaka, Andhra Pradesh, and is finalizing partnerships for electrolyzer production. In battery storage, it plans to install grid-scale facilities to support solar and wind power, while participating in standalone grid-scale storage tenders for grid balancing. Leveraging NTPC's established reputation, NGEL benefits from strong operational and strategic ties, securing low-cost debt financing at ~7%.
NTPC Share Price Recommendation:
The portfolio of NTPC Green Energy makes NTPC's valuation attractive.
On NTPC, Elara's note said, "Post NGEL's listing, we analyzed the incremental value addition for NTPC. Previously, without holding company discount, we had arrived at an option value of INR 63/share for NGEL, thus arriving at a TP of INR 497 for NTPC. At the current CMP of INR 122 and factoring in a holding company discount of 25%, the option value for NGEL increases to INR 71/share, thus resulting in a rise in TP to INR 505. At current market price, NGEL is trading at 15.6x EV/EBITDA."
NTPC Share Price:
By the end of the December 6th trading session, NTPC's share price stood at Rs 369.45 apiece on BSE, with a market cap of Rs 3,58,243.33 crore. Its price-to-equity ratio is at 18.57x, while its return on equity (RoE) is at 12.36%. YTD, NTPC stock has zoomed by 19.37% on BSE so far.
NTPC is India's largest integrated power company, dedicated to lighting every corner of the country and building a sustainable future for all. As a leader in the power sector, we are committed to generating efficient and affordable power, aiming to achieve 130 GW by 2032. Established in 1975, NTPC has played a vital role in India's economic growth for nearly five decades. With a commitment to operational excellence and adherence to global standards, we are lighting every fourth bulb in the country!
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