NTPC Green Energy IPO: Stock to gain lift with higher revenue

NTPC Green Energy, a wholly-owned subsidiary of NTPC Ltd, has recently filed draft papers for Rs 10,000 crore initial public offering (IPO) with markets regulator SEBI.

NTPC's re-rating in the last two years is attributable to a large extent to this burgeoning renewable energy (RE) business, which is on a path to launch IPO in the first half of FY2025, MOFSL said in a note.

The highly placed source said the IPO is expected to be launched in first week of November this year. The source informed us that the company has planned roadshows in India (Mumbai) as well as abroad, especially in Singapore.

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The initial share sale is a fresh issuance of equity shares with no offer-for-sale (OFS) component, according to the draft red herring prospectus (DRHP).

The company said proceeds of the issue to the tune of Rs 7,500 crore will be used to repay or prepay part or all of its subsidiary NTPC Renewable Energy Ltd's (NREL) outstanding loans. At the same time, a portion will be utilized for general corporate purposes.

On NTPC Green Energy, it said the company is not only looking to set up utility-scale RE projects, but also tie up with corporates and PSUs for their captive RE requirements, ICICI Securities said.

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"We expect the return ratios for captive to be higher than utility-scale projects. NTPC targets 60GW of RE capacity by FY32. We estimate revenue of Rs 11,700 crore and EBITDA of Rs 9,500–10,000 crore for its portfolio," ICICI Securities said.

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