NTPC Green Energy IPO - Issue Details, Financials, Strengths, Risks, Peer Comparison And More: Anand Rathi

Anand Rathi Report

NTPC Green Energy Ltd. will launch its initial public offering on Nov. 19 and the offer closes for subscription on Nov. 24. Country's largest renewable energy public sector enterprise (excluding hydro) in terms of operating capacity has fixed the price band in the range of Rs 102 and Rs 108 per share. Minimum order lot for bidding is 138.

The Rs 10,000 crore IPO comprises entirely of a fresh issue of approximately 92.6 crore shares.

Objects of the Issue

• Repayment in full or in part, of certain outstanding borrowings availed by subsidiaries.

• General corporate purpose.

Valuation & Outlook

NTPC green energy is one of the leading renewable power generating PSU having solar and wind power generation assets alongside increase focus on hydroelectric assets and power storage plans. It is going to be the leader in the segment with additional activities on hydroelectric projects.

The company aims to increase its operational capacity to 6, 11, 9 GW by FY25, FY26E, FY27E respectively from 3.3 GW as of Sep-24. On valuation parse at the upper price band Rs 108/-, the issue is asking a Market Cap of Rs 910000 million and based on FY25e annualized earnings and fully diluted post IPO paid-up capital, the company is asking for a PB of 4.96 times and PE of 259.56 times which appears aggressively priced. But considering its current established capacities and future expanded capacities, this is a pure long term story.

The company is well placed to capture the tailwind from capacity addition in renewables owing to its strong parentage (NTPC), low operating costs along with diversified capacity portfolio and access to lower cost of capital. Therefore we believe that this issue may be considered for its long term growth. Hence we give “Subscribe for Long term" rating to this IPO.

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