NTPC Green Energy Limited (NGEL), a subsidiary of NTPC Limited, has launched its highly anticipated ₹10,000 crore IPO to support India's ambitious green energy initiatives. The IPO is open for subscription from November 19, 2024, to November 22, 2024, with shares expected to list on the BSE and NSE on November 26, 2024. Here's a detailed analysis of the IPO.

IPO Highlights

1. Issue Details:

   • Type of Issue: Book Built Issue
   • IPO Size: ₹10,000 crore, entirely a fresh issue of 9,259.25 lakh shares
   • Price Band: ₹102-₹108 per equity share
   • Market Cap at IPO Price: ₹90,999.99 crore (at ₹108 per share)
   • Lot Size: 138 shares
   • Minimum Investment:
     • Retail Investors: ₹14,904 (1 lot)
     • High-Net-Worth Individuals (HNIs): ₹2,08,656 (14 lots)

2. Important Dates:

   • Subscription Period: November 19-22, 2024
   • Allotment Date: November 25, 2024
   • Listing Date: November 26, 2024

3. Lead Managers & Registrar:

   • Book-Running Lead Managers:
     • IDBI Capital Markets & Securities Limited
     • HDFC Bank Limited
     • IIFL Capital Services Limited
     • Nuvama Wealth Management Limited
   • Registrar: KFin Technologies Limited

Company Overview

NTPC Green Energy Limited (NGEL) is the green energy arm of NTPC Limited, India’s largest power utility. NGEL focuses on developing renewable energy projects to meet NTPC's ambitious target of 60 GW of green energy by FY32.

The company engages in renewable energy projects through bidding processes, tenders, and Ultra Mega Renewable Energy Power Parks (UMREPPs), making it a pivotal player in India's clean energy future.

Financial Performance

NTPC Green Energy has demonstrated strong growth:

1. Revenue from Operations:

   • FY24: ₹20,376.57 million
   • FY23: ₹1,706.31 million

2. EBITDA:

   • FY24: ₹17,464.70 million
   • FY23: ₹1,513.81 million

3. Profit After Tax (PAT):

   • FY24: ₹3,447.21 million
   • FY23: ₹1,712.28 million

4. Valuation Metrics:

   • Pre-Issue EPS: ₹0.73
   • Post-Issue EPS: ₹0.40
   • Pre-Issue P/E Ratio: 147.94x
   • Post-Issue P/E Ratio: 270.00x

The Cash Return on Equity (RoE) for FY24 stands at 17.76%, while the industry P/E ratio is 153.44x.

IPO Objectives

The net proceeds from the IPO will be used for:

1. Investment in NTPC Renewable Energy Limited (NREL):
   • ₹7,500 crore to repay or prepay borrowings of NREL.
2. General Corporate Purposes.

Anchor Investors

NGEL has raised ₹3,960 crore from anchor investors at the upper price band of ₹108 per share. A total of 36.67 crore shares were allocated to anchor investors.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for NTPC Green Energy is currently ₹0, reflecting a lack of excitement in the unorganized market. This signals a cautious outlook for listing gains.

Live Subscription Status

As of 11:00 AM on November 21, 2024, the IPO has been subscribed 0.46 times, with demand primarily from Qualified Institutional Buyers (QIBs).

Investment Review

While NTPC Green Energy Limited boasts impressive growth and a significant role in India's renewable energy landscape, the IPO's valuation metrics indicate that it is fully priced.

Key factors to consider:

• High P/E Ratio: The post-issue P/E ratio of 270.00x suggests a steep valuation.
• Zero GMP: Indicates a lack of enthusiasm for listing gains.
• Industry Potential: NTPC Green Energy is well-positioned in a growing sector, but current financial metrics do not favor immediate returns.

Recommendation: Avoid for both listing gains and long-term investment purposes unless you have a high-risk appetite and long-term conviction in India’s renewable energy growth story.

The Upcoming IPOs in this week and coming weeks are C2C Advanced System, Enviro Infra, Rajesh Power Services, Rajputana Biodiesel, Rosmerta Digital, Avanse Financial and Nisus Finance.

The Current active IPO is NTPC Green Energy and Lomosaic India.

For more insights into financial trends , visit our Top News Headlines. You can also explore investment opportunities in the market and apply for upcoming IPOs through our Best IPO to Apply Now section.