Unlisted shares of NTPC Green Energy Ltd trade at Rs 108.8 apiece in the grey market, which is only 0.74 per cent above the issue price of Rs 108 per share.
NTPC Green Energy IPO GMP: The initial public offering of state-owned NTPC Ltd’s renewable energy arm NTPC Green Energy Ltd (NGEL) was opened on November 19 and received a 0.36 times overall subscription on the first day of bidding with the retail portion getting oversubscription. However, its grey market premium (GMP), which shows the readiness of investors to pay above the IPO issue price, remains dismally low at 0.74 per cent.
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NTPC Green Energy IPO GMP Today
According to market observers, unlisted shares of NTPC Green Energy Ltd were trading at Rs 108.8 apiece in the grey market on Wednesday, which was only Rs 0.80 or 0.74 per cent above the issue price of Rs 108 per share. The Rs 0.80 GMP indicates a subdued sentiment of investors for the IPO and signals a muted listing performance.
Its GMP has fallen steeply in the past 20 days.
The GMP is based on market sentiments and keeps changing. ‘Grey market premium’ indicates investors’ readiness to pay more than the issue price.
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NTPC Green Energy IPO: Latest Subscription Status
The NTPC Green Energy IPO, which will be closed on November 22, was subscribed 36 per cent on the first day of the IPO on Tuesday, November 19. It received bids for 20,19,81,492 shares against 56,01,58,217 shares on offer.
The retail investors’ category received a 1.47 times subscription, while the non-institutional investors (NII) portion got subscribed 17 per cent.
NTPC Green Energy mobilised Rs 3,960 crore from anchor investors a day before the IPO.
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NTPC Green Energy IPO: Analysts’ Recommendations
Most brokerages have given ‘subscribe for long term’ recommendations for the IPO.
SBI Securities in its IPO note said, “NGEL has a large portfolio of utility-scale solar and wind energy projects coupled with projects for PSUs and Indian corporates. The company along with the NTPC Group have a strong track record of developing, constructing and operating renewable power projects, driven by experienced in-house management and procurement teams.”
At the upper price band of Rs 108, NGEL is valued at FY24 EV/EBITDA of 53.4x on post issue capital. The company will increase its operational capacity to 6/11/19 GW by FY25E/FY26E/FY27E respectively from 3.3 GW as of September 2024. Basis our back of the envelope calculation, at upper price band, the issue is priced at FY25E/FY26E/FY27E EV/EBITDA multiple of 35.3x/18.3x/10.1x and EV/MW of Rs 16.8 cr/9.0 cr/5.1 cr respectively. The company has exponential growth potential in medium term with its Revenue/EBITDA/PAT expected to grow at a CAGR of 79.0%/117.2%/123.8% to Rs 11,250 cr/9,563 cr/1,980 cr respectively over FY24-27E period.
“We recommend investors to subscribe to the issue at cut-off price for long term,” SBI Securities said in the note.
Another brokerage firm Reliance Securities also granted a ‘subscribe for long term’ rating to the IPO.
It said NGEL benefits from NTPC’s financial strength and long-term relationships with off takers and suppliers, growing its revenues along with strong credit ratings that enable a low cost of debt executing large scale projects. NGEL has deep domain expertise of the management team focusing on new energy solutions like green hydrogen, green chemicals and storage with prudent growth and contributing towards fulfilling India’s net zero goals.
“We believe with a prudent business model and strong earnings growth with improved financials and return ratios, we recommend a Subscribe to the issue for the long term,” Reliance Securities said.
NTPC Green Energy IPO: More Details
The Rs 10,000-crore IPO is a fully fresh equity issuance with no Offer-for-Sale (OFS) component. The public issue, priced between Rs 102 and Rs 108 per share, will be open for subscription from November 19 to November 22.
The company plans to allocate Rs 7,500 crore from the proceeds to repay or prepay loans of its subsidiary, NTPC Renewable Energy Ltd (NREL), with the remaining funds earmarked for general corporate purposes.
NTPC Green Energy, a ‘Maharatna’ central public sector enterprise, boasts a renewable energy portfolio that includes solar and wind power assets.
The IPO is being managed by IDBI Capital Markets & Securities, HDFC Bank, IIFL Capital Services (formerly IIFL Securities), and Nuvama Wealth Management as book-running lead managers.
