NTPC - A Lot Riding On Renewable Energy; Key Takeaways From NGEL’s DRHP: ICICI Securities

ICICI Securities Report

NTPC Green Energy Ltd., a 100% subsidiary of NTPC Ltd., is looking to debut on exchanges as the company files its draft red herring prospectus.

In this note, we analyse NGEL’s business, look at its valuation metrics and evaluate key concerns.

The company has an operational capacity of 3.2 GW, 12 GW of contracted under-construction renewable energy projects and future development pipeline at 11GW.

NGEL is not only looking to set up utility-scale RE projects, but also tie up with corporates and public sector undertakings for their captive RE requirements.

We expect the return ratios for captive to be higher than utility-scale projects. NTPC targets 60GW of RE capacity by FY32.

We estimate revenue of Rs 117 billion, Ebitda of Rs 95–100 billion for its portfolio. EV to Ebitda remains the best valuation metric to analyse NGEL’s RE portfolio. Retain Buy and target price of Rs 495 on NTPC.

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