NTPC Green Energy IPO: What Investors Need to Know Before Subscribing

The NTPC Green Energy IPO will open for subscriptions on November 19, 2024, and will close on November 22, 2024. The allocation of shares is expected to be finalized by November 25, 2024, and the IPO will be listed on both the BSE and NSE on November 27, 2024.

IPO Size and Structure

This IPO is a Rs. 10,000 crore book-built offering, which comprises a fresh issuance of shares valued at Rs. 92.59 crore.

Price Band and Subscription Details

The price range for the NTPC Green Energy IPO has been fixed between Rs. 102 and Rs. 108 per share.

The minimum lot size is 138 shares, which means retail investors will need to invest a minimum of Rs. 14,904 based on the issue price. For large Non-Institutional Investors (NII), the minimum investment is Rs. 1,013,472 (68 lots or 9,384 shares). For small NIIs, the minimum lot size is 14 lots (1,932 shares), requiring an investment of Rs. 208,656.

About NTPC Green Energy

NTPC Green Energy is a wholly-owned subsidiary of NTPC Limited, incorporated in April 2022. The company focuses on the development of renewable energy projects, using both organic and inorganic methods.

Objectives of the IPO

The funds raised through the IPO will be used to invest in its subsidiary, NTPC Renewable Energy Limited (NREL). The company plans to use the proceeds for the repayment or prepayment of borrowings.

IPO Lead Managers and Registrar

The IPO is being managed by the following lead managers:

• IDBI Capital Market Services Limited
• HDFC Bank Limited
• IIFL Securities Ltd
• Nuvama Wealth Management Limited

The registrar for the issue is Kfin Technologies Limited.

Financial Performance of NTPC Green Energy

NTPC Green Energy has shown impressive growth in its financials. In FY24, the company’s revenue increased by 1094.19%, and its profit after tax (PAT) rose by 101.32% compared to the previous financial year.

Industry Peers

NTPC Green Energy operates in the renewable energy sector. Its main competitors are Adani Green Energy Ltd and ReNew Energy Global PLC.

Key Risks for the Company

One significant risk for NTPC Green Energy is its dependence on a small number of customers. In Fiscal 2024, more than 87% of its revenue came from just five customers, with the largest customer accounting for about 50% of its total revenue. If the company loses any of these customers or if their financial situation worsens, it could negatively impact NTPC Green Energy’s business.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for NTPC Green Energy shares is currently Rs. 3, as per investorgain.com. This means that the shares are being traded at a Rs. 3 premium over the issue price in the grey market. Investors expect that the shares will be listed at around Rs. 111, which is 2.78% higher than the upper price band of Rs. 108.

Also read: India's Retail Inflation Rises to 6.21% in October 2024, Hitting 14-Month High

SUMMARY

The NTPC Green Energy IPO is set to open for subscriptions on November 19, 2024, and will close on November 22, 2024. The IPO, valued at Rs. 10,000 crore, includes a fresh issue of shares worth Rs. 92.59 crore. The price band for the shares is set between Rs. 102 and Rs. 108 per share, with the minimum investment for retail investors being Rs. 14,904.

NTPC Green Energy, a subsidiary of NTPC Limited, focuses on renewable energy projects. The funds raised will be used to repay loans and invest in its subsidiary NTPC Renewable Energy Limited (NREL). The company's financial performance has been strong, with a significant increase in revenue and profits in FY24.

The IPO is managed by leading financial firms, including IDBI Capital and HDFC Bank, with Kfin Technologies as the registrar. Investors should also note the risk associated with the company’s dependence on a few major customers, as over 87% of its revenue in FY24 came from its top five clients.

The shares are currently trading at a Rs. 3 premium in the grey market, suggesting an expected listing price of Rs. 111, which is about 2.78% higher than the upper issue price.