NTPC Ltd’s renewable energy subsidiary, NTPC Green Energy, has submitted a draft red herring prospectus (DRHP) to SEBI for its highly anticipated Rs 10,000-crore initial public offering (IPO). Expected to be one of India’s largest IPOs in 2024, the offering will consist entirely of fresh equity shares, with no sale of shares by promoters.
The IPO includes a quota for existing NTPC Ltd shareholders, with up to 10% of the issue reserved for them. Shareholders holding NTPC stock as of the prospectus filing date will have the opportunity to participate, offering them a chance to invest directly in NTPC’s growing renewable energy business.
Strong Growth Outlook for NTPC Green Energy
Jefferies has issued a ‘buy’ rating on NTPC, with a target price of Rs 485 per share, reflecting a 17% upside from the last closing price of Rs 413.8. The brokerage highlighted the significant increase in renewable energy bids, with FY24 seeing awards of 37-39 GW, up from 8-9 GW YoY. NTPC is progressing toward its ambitious goal of 60 GW of renewable energy capacity by 2032, with 24 GW already in the pipeline. Additionally, NTPC’s investments in green hydrogen pilot projects are seen as key drivers for a stock re-rating.
The IPO comes at a time when NTPC, traditionally focused on thermal power, is diversifying its energy portfolio to enhance revenues. “Considering that green energy will remain a key focus in the future, investors are eager to get a slice of this pie,” said Kranthi Bathini, Director of Equity Strategy at WealthMills Securities.
Unlocking Value Through Listing
NTPC Green Energy aims to unlock significant value through the listing, with the leadership previously indicating the IPO would launch by the end of 2024. This Rs 10,000-crore offering will be the largest by a public sector unit (PSU) since Life Insurance Corporation’s Rs 21,000-crore IPO in 2022. The funds raised are expected to support the company’s ongoing and future projects in solar energy, green hydrogen, and green ammonia.
NTPC Green Energy’s Expansion Plans
Formed in April 2022 to consolidate NTPC’s renewable assets, NTPC Green Energy currently boasts 3.3 GW of installed capacity, with another 5.9 GW under construction. The company’s ambitious growth strategy includes 10.8 GW of projects in the pipeline, with bids won and bilateral agreements in place. Its long-term target is to achieve 60 GW of renewable capacity by 2032, positioning itself as a leader in India’s green energy transition.
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