NTPC Green Energy IPO: Your Gateway to India’s Renewable Energy Boom

Indian green energy sector has been on a rapid upward trajectory, with increasing global and domestic focus on sustainable energy solutions. Currently valued at US$ 10 billion, this sector is expected to double by 2025 and potentially soar to US$ 50 billion by 2030. With the Indian government’s ambitious target of achieving 500 GW of non-fossil fuel capacity by 2030, the country is positioning itself as a global leader in renewable energy.

This sector includes a wide variety of renewable energy offerings such as solar power, wind energy, bioenergy, hydropower, and emerging technologies like energy storage and energy efficiency solutions. With immense growth potential, India has been attracting significant investments from both domestic and international players, aiming to reduce carbon emissions and support sustainable development.

Among the key players in this growing market is NTPC Green Energy Ltd. (NGEL), which is preparing for its highly anticipated initial public offering (IPO). The IPO is seen as an opportunity for investors to be part of India’s green energy revolution. This blog covers everything you need to know about the NTPC Green Energy IPO, its growth trajectory, and why it represents a promising investment opportunity.

What is NTPC Green Energy?

NTPC Green Energy Limited was incorporated in April 2022 as a specialized subsidiary of NTPC Ltd*, specifically tasked with managing the company’s renewable energy portfoli*. NTPC Ltd., one of India’s largest power producers, is taking significant steps to diversify its energy mix and reduce its reliance on fossil fuels by focusing on renewable energy solutions.

In just two years, NTPC Green Energy has made impressive strides with a total installed capacity of 3.34 GW, consisting of 3.13 GW of solar energy and 0.21 GW of wind energy. Additionally, the company has an extensive project pipeline, with 10.8 GW of renewable energy projects in various stages of development, including 5.9 GW currently under construction.

The company’s goals are ambitious, aiming to play a critical role in NTPC’s overarching target of 60 GW of renewable energy capacity by 2032. With strong financial performance in FY24, where the company recorded a net profit of Rs 3,447 million on revenues of Rs 19,626 million, NTPC Green Energy is poised for substantial growth in the coming years.

Expanding Beyond Solar and Wind

While solar and wind energy have been the mainstays of NTPC Green Energy’s portfolio, the company is also actively exploring opportunities in green hydrogen, green ammonia, and energy storage systems. These are cutting-edge areas within the global renewable energy industry and are closely aligned with India’s broader decarbonization and renewable energy targets.

By diversifying its portfolio into emerging sectors, NTPC Green Energy is positioning itself as a key player in the energy transition, both in India and internationally.

IPO Details

Here are the key highlights of the NTPC Green Energy IPO:

• Issue Period: November 9, 2024, to November 12, 2024

• Type of Issue: Book Built Issue

• Face Value: Rs 10 per equity share

• Allotment Date: November 14, 2024

• Tentative Listing Date: November 18, 2024

• Issue Size: Rs 100 billion (entirely a fresh issue)

This IPO, which will raise Rs 100 billion, is set to provide NTPC Green Energy with the capital it needs to pursue its ambitious growth plans, which include scaling up its solar and wind capacity as well as investing in green hydrogen and energy storage solutions.

Backed by the Legacy of NTPC Group

NTPC Green Energy’s growth is further enhanced by its parent company, NTPC Ltd., which has a long-standing reputation as one of India’s largest and most trusted power producers. NTPC Ltd. has been making concerted efforts to increase the share of renewable energy in its overall energy portfolio.

NTPC enjoys the highest credit ratings from both Indian and international rating agencies, indicating strong financial stability. This credibility extends to NTPC Green Energy, which benefits from the support and resources of NTPC Ltd. as it embarks on its journey to achieve 60 GW of renewable energy capacity by 2032.

Peer Comparison: NTPC Green Energy vs. Competitors

When comparing NTPC Green Energy, ReNew Energy Global, and Adani Green Energy for FY24, it becomes clear that each company has its strengths across various metrics.

• Solar Capacity: NTPC Green Energy has an installed solar capacity of 2,825 MW, which is smaller compared to ReNew Energy Global’s 4,700 MW and Adani Green Energy’s 7,393 MW.

• Wind Capacity: NTPC Green Energy has 100 MW of installed wind capacity, trailing far behind ReNew Energy Global’s 4,800 MW and Adani Green Energy’s 1,401 MW.

• Revenue: In terms of revenue, Adani Green Energy leads with Rs 28,340 million, while NTPC Green Energy reported Rs 5,784.42 million, and ReNew Energy Global saw Rs 1,696.90 million.

• Profit Margins: NTPC Green Energy boasts a PAT margin of 23.96%, while ReNew Energy Global stands out with 100.91%, and Adani Green Energy reports 22.19%.

• Debt Ratios: NTPC Green Energy has a debt-to-equity ratio of 2.32x, whereas ReNew Energy Global’s ratio is lower at 1.09x, and Adani Green Energy’s data is not available.

This comparison highlights the financial performance and operational capacities of each player in the renewable energy sector.

As we can see, NTPC Green Energy has demonstrated strong operational performance and profitability compared to its peers, positioning itself as a leader in the renewable energy sector.

Key Factors Impacting NTPC Green Energy’s Performance

1. Reliance on Offtakers: NTPC Green Energy’s revenues rely heavily on top offtakers through power purchasing agreements (PPAs). Any disruptions in these contracts could affect the company’s financial health.

2. Supply Chain Dependency: The company is dependent on third-party suppliers for essential components like solar modules and wind turbines. Any supply chain disruptions could impact profitability.

3. Geographical Concentration: The majority of NTPC Green Energy’s current projects are concentrated in Rajasthan. Any economic or political disturbances in this region could adversely affect its operations.

How NTPC Green Energy Plans to Utilize IPO Funds

NTPC Green Energy plans to use Rs 75 billion of the proceeds from the IPO to invest in its subsidiary, NTPC Renewable Energy (NREL), for project development and debt repayment. The remaining funds will be used for general corporate purposes, such as expanding its solar and wind project pipeline and exploring opportunities in green hydrogen and energy storage.

Benefits for NTPC Shareholders and Employees

Investors who already hold shares in NTPC Ltd. stand to benefit from a special category in the IPO, allowing them to bid for up to Rs 400,000. Employees of NTPC Green Energy, who hold shares in NTPC Ltd., can invest even more, with a limit of Rs 600,000. These benefits provide an added incentive for existing NTPC shareholders and employees to participate in the IPO.

In conclusion, NTPC Green Energy IPO represents a major opportunity for investors to enter India’s rapidly growing renewable energy sector. With strong financial performance, support from NTPC Ltd., and a clear growth trajectory, NTPC Green Energy is well-positioned to lead India’s transition toward sustainable energy. As the world shifts toward clean energy solutions, investing in companies like NTPC Green Energy offers the potential for both financial growth and sustainability.

If you’re considering entering the renewable energy market, the NTPC Green Energy IPO is a compelling opportunity. However, as with any investment, be sure to assess the risks and market conditions carefully before making your final decision.