NTPC Green Energy IPO Sees Rapid Retail Demand, Fully Subscribed on Day One

Despite a cautious IPO market, NTPC Green Energy IPO has managed to secure a strong response, particularly from retail investors. The IPO, launched on November 19, 2024, by NTPC’s renewable energy arm, saw its retail portion fully subscribed within hours of its debut.

The offering remains open until Friday, November 22, and appears to be on course for full subscription as it nears its conclusion.

By the second day of bidding, the public issue had achieved a 0.88 times subscription rate by 3:21 PM, with retail investors leading the charge at 2.24 times subscription.

Non-Institutional Investors (NII) subscribed to 0.30 times the shares allocated to them, while Qualified Institutional Buyers (QIBs) reached 0.74 times subscription.

A Strong Start Backed by Anchor Investments

Ahead of the IPO’s launch, NTPC Green Energy secured ₹3,960 crore from anchor investors, lending significant credibility to the public issue. On the opening day, the IPO achieved an overall subscription rate of 33%.

Retail investors oversubscribed their allotment by 1.33 times, showing robust interest. The NII segment saw a modest 16% subscription rate, while QIBs did not place any bids on the first day. Additionally, 17% of the shares reserved for employees were subscribed, and 57% of the shareholder segment was filled.

NTPC Green Energy: A Market Leader in Renewables

As a subsidiary of NTPC Ltd, NTPC Green Energy has cemented itself as a leader in the public sector renewable energy market, excluding hydropower. For the fiscal year 2024, the company has maintained a dominant position in terms of operational capacity and power generation.

The company’s Red Herring Prospectus (RHP) identifies Adani Green Energy Ltd and ReNew Energy Global PLC as comparable peers, with P/E ratios of 259.83 and 47.05, respectively.

Industry Expert Reviews

Indsec Securities

According to Indsec Securities, NTPC Green Energy benefits from its parent company’s strong backing, reliable execution capabilities, and favorable trends in the renewable energy industry. The company’s involvement in Battery Energy Storage Systems (BESS) is also expected to support its long-term growth.

NTPC has outlined ambitious plans to achieve a non-fossil fuel capacity of 60 GW by 2032. This goal translates into projected EV/MW ratios of 15.6x, 8.5x, and 4.9x for FY25E, FY26E, and FY27E, respectively.

However, Indsec Securities has expressed concerns over the IPO’s pricing, noting that it is higher compared to peers trading at EV/EBITDA multiples of 38–40x. The brokerage has given the IPO a “Subscribe for Long-Term” recommendation.

SBICAP Securities

SBICAP Securities also highlighted NTPC Green Energy’s significant growth potential, projecting revenue, EBITDA, and PAT to grow at CAGRs of 79.0%, 117.2%, and 123.8% respectively over the FY24–27 period.

The brokerage estimated EV/EBITDA multiples for the upper price band at 35.3x, 18.3x, and 10.1x for FY25E, FY26E, and FY27E, respectively. Similarly, EV/MW is forecasted at ₹16.8 crore, ₹9.0 crore, and ₹5.1 crore for the same periods.

Despite the high valuations, SBICAP Securities advises investors to subscribe to the IPO at the cut-off price, emphasizing its potential for long-term returns.

IPO Details and Fund Allocation

The NTPC Green Energy IPO, valued at ₹10,000 crore, comprises entirely fresh equity shares, with no Offer for Sale (OFS) component. Of the total proceeds, ₹7,500 crore will be used for investments in NTPC Renewable Energy Limited (NREL), debt repayments or prepayments related to NREL, and general corporate purposes.

Key players managing the offering include IDBI Capital Markets & Securities Limited, HDFC Bank Limited, IIFL Securities Limited, and Nuvama Wealth Management Limited. KFin Technologies Limited is serving as the registrar.

Grey Market Activity

The IPO’s grey market premium (GMP) today stands at ₹0.80, reflecting a slight premium above the issue price. This positions the estimated listing price at ₹108.8 per share, a 0.74% increase from the IPO price of ₹108, according to investorgain.com.

Grey market activity has shown a downward trend recently. Over the past 17 sessions, the GMP has ranged from a peak of ₹25 to a low of ₹0. A GMP indicates investors’ willingness to pay above the issue price, reflecting market sentiment towards the IPO.