NTPC Green Energy Ltd (NGEL), a subsidiary of NTPC Ltd dedicated to renewable energy, is poised to unveil its IPO, known as the NTPC Green Energy IPO, in the latter part of this fiscal year, expectedly around October-November. Targeting to raise ₹10,000 crore, it marks the largest public sector IPO since LIC’s in 2022, with funds earmarked for current and upcoming renewable projects.
NTPC Green Energy Ltd (NGEL), a subsidiary of state-owned NTPC Ltd focusing on renewable energy projects, is expected to launch its initial public offering (IPO) in the latter half of the current fiscal year. NTPC Ltd reportedly indicated to analysts in a conference call that it plans to list NTPC Green Energy by October-November this year. In fact, the company has already selected investment bankers for the proposed IPO in April, as per reports. NTPC aims to raise approximately ₹10,000 crore through the NTPC Green Energy public offering, making it the largest IPO by a public sector company in over two years since the ₹21,000-crore issue of the Life Insurance Corporation of India (LIC) in May 2022. The proceeds from the IPO are intended to finance ongoing and future projects in solar, green hydrogen, and green ammonia, according to reports.
NTPC Green Energy (NGEL) serves as the overarching entity for NTPC’s green business ventures. Established in April 2022 as a wholly owned subsidiary of NTPC, its mandate includes orchestrating the holistic development of power generation via non-conventional and renewable energy sources, as well as acquiring green energy assets from NTPC or the market.
By March 2023, NGEL had procured 15 renewable energy assets and obtained full ownership of NTPC Renewable Energy Ltd from NTPC. These assets are distributed across 6 states and hold long-term power purchase agreements (PPAs) with state power distribution companies.
NTPC Green Energy IPO: Propelling Renewable Ventures and Market Expansion
Aligned with NTPC’s commitment to add 60 GW renewable capacity by 2032, NGEL has undertaken diverse initiatives, including the establishment of solar and wind power projects, ultra-mega renewable energy power parks (UMREPP), and green hydrogen ventures.
In FY 2022-23, NGEL reported total revenue of ₹170.60 crore. During the fiscal year, it maintained a credit balance of ₹174.44 crore in its standalone financial statement, resulting in a net profit of ₹174.44 crore. Excluding this one-time gain, net profit amounted to ₹56.38 crore.
Shares of NTPC Ltd concluded 1.28% lower at ₹370.15 each on the NSE.
NTPC plans to raise “a billion dollars” – equivalent to over ₹8,300 crore at the current exchange rate – through the initial public offering (IPO) of its wholly-owned subsidiary, NTPC Green Energy (NGEL), according to chairman and MD Gurdeep Singh. The NGEL IPO is slated to debut early in the second half of the current fiscal year, Singh disclosed. He further stated that while the company has a robust balance sheet and can easily raise funds, they aim to initiate with a 10% stake sale, followed by a 15% offer for sale (OFS), as part of their strategy. This approach will help NGEL comply with the regulatory requirement of achieving a minimum 25% public float and is expected to facilitate the green arm in surpassing its parent company’s growth.
The IPO proceeds would fund NGEL’s green and energy transition projects, encompassing green hydrogen and energy storage technologies.
Singh highlighted that the NTPC group’s coal business might have hindered investor confidence in the green energy portfolio. However, once the public float is established, the valuation of NGEL’s green business is expected to improve.
“For the carbon-free green business, investors are willing to pay a higher multiple, resulting in a larger valuation and potential outpacing of NTPC,” Singh remarked. He also addressed concerns regarding the parent stock’s impact from the green IPO, citing its lower P/E ratio compared to private peers and the potential of its carbon business.
NTPC’s share price dipped 1.26% to `360 on Thursday. Over the past four days, it has corrected by 3.96% from its all-time high of `374.85 on May 24. Year-to-date, the stock has returned 15.7%, while over the past year, it surged by 103.74%.
In a recent analyst call, the company management disclosed NTPC group’s annual capex plans of `35,000-50,000 crore over the next 2-3 years, with the green segment driving it.
NGEL has engaged IDBI Capital Markets and Securities, HDFC Bank, IIFL Securities, and Nuvama Wealth Management to manage the IPO. The company is expected to expedite the process post June.
Over the years, NTPC has diversified into renewable energy sources, chemicals like ethanol and methanol, and nuclear energy. Going forward, it aims to intensify its focus on renewable and nuclear energy, along with exploring energy storage solutions.
In nuclear energy, besides the announced Rajasthan project, NTPC is exploring opportunities in Tamil Nadu, Karnataka, and Gujarat, among other states, and is in the process of site identification and approvals. These projects are likely to be undertaken solely by the company.
“We are exploring new sites for nuclear projects in Gujarat, Tamil Nadu, Jharkhand, Chhattisgarh, and Karnataka, subject to approval by the Atomic Energy Regulatory Board,” Singh stated.
NTPC recorded a 33% year-on-year surge in its consolidated net profit in Q4FY24 to `6,490.05 crore. On a sequential basis, the net profit rose by 24.5% in Q4FY24. Singh attributed this to cash flows generated by subsidiaries and joint ventures. NTPC has 25 subsidiaries/joint ventures.
NTPC Group aims to achieve an operational renewable energy capacity of 60 GW by 2032, substantially higher than the current 3.6 GW, with most new capacities being developed through competitive bidding. It targets 3 GW of RE capacity in 2024-25, followed by 5 GW and 8 GW in FY26 and FY27, respectively. The company also aims to add 22.5 GW of cumulative installed power capacity in the next three years, including thermal and renewable power, pump storage plants, and nuclear energy.
The company is also pursuing new thermal orders totaling 15.2 GW in the coming years, with plans to award thermal projects worth 10.4 GW in FY25. Additionally, it aims to commission 2.8 GW of thermal capacity in FY25 and another 1.5 GW in FY26.
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