NTPC Green IPO Opens For Subscription; GMP Indicates Negligible Listing Gains
At the upper price band of Rs 108 per share, NGEL is valued at an FY24 EBITDA multiple of 53.4 times
The Initial Public Offering (IPO) of NTPC Green Energy (NGEL), a subsidiary of the Maharatna public sector enterprise NTPC, opened for subscription from today, Tuesday.
The IPO is offered, at a price band of Rs 102 to 108 per share, and subscription is open until Friday. The company plans to raise a total of Rs 10,000 crore and is scheduled to list on the stock exchanges on 27 November.
Shareholders of NTPC can apply for the IPO under a special shareholder quota. Additionally, NTPC employees have a separate quota for applying. The lot size for the IPO is 138 shares. The shares will be transferred to demat accounts on 26 November.
At the upper price band of Rs 108 per share, NGEL is valued at an FY24 EBITDA multiple of 53.4 times. Analysts have expressed confidence in the company's long-term growth potential and recommended subscription for investors seeking sustainable and long term profitable opportunities.
“In terms of valuation, the IPO is priced aggressively at a price to earnings (PE) ratio of 264 times as of FY 2024, which is significantly higher than its peers. The aggressive valuation suggests that the IPO may be suited for only investors with a high-risk appetite and investing for the long term, while grey market price (GMP) indicates minimal listing gains. The company’s high valuation could pose risks for investors investing with a view of short-term gains,” said Gaurav Garg, Research Analyst, Lemonn Markets Desk.
Revenue, EBITDA, profit after tax (PAT) grew by 47 per cent, 48 per cent and 91 per cent CAGR respectively over FY22-24 on the back of strong energy sales, high-capacity utilisation and low costs.
NGEL has maintained strong EBITDA margins at 89 per cent (3-year average) and PAT margins at 20 per cent (3-year average) over FY22-24, led by superior execution and economies of scale.
“At the upper price band of Rs 108, NGEL is available at price to book value of of 4.9 times (on FY25E annualised financials), which appears to be fairly priced. We assign a ‘Subscribe’ rating for the issue on a long-term investment basis, considering its strong brand recall, superior execution capabilities, portfolio expansions, investment in nextgen energy solutions and promising industry outlook,” stated Geojit Financials.
NGEL aims to scale its operational renewable capacity to 19 GW by FY27, reflecting its commitment to India's clean energy transition.
This IPO is part of NTPC broader strategy to achieve 60 GW of renewable energy capacity by 2032. NTPC currently contributes 24 per cent of India's total power generation and views NGEL as a critical vehicle to drive its renewable energy ambitions.
As of September 2024, NGEL operates 3,220 MW of solar and 100 MW of wind power projects. The company has a robust pipeline with 13,576 MW of contracted and awarded projects and an additional 9,175 MW in development. (With inputs from ANI)
