NTPC Green Energy Ltd IPO: Aiming for Growth Amid Challenges
The Initial Public Offering (IPO) of NTPC Green Energy Ltd (NGEL) is set to open on November 19. Analysts from SBI Securities suggest subscribing to the IPO at the cut-off price for long-term benefits, citing the company’s strong growth potential.
Key Considerations
NGEL relies on imported solar panels and components without long-term contracts, making it susceptible to supply chain issues. The company faces challenges in timely project execution, which could affect its financial performance.
NGEL’s projects are mainly in Rajasthan, posing regional risks. It depends on a few power purchasers for over 97% of its revenue, and winning competitive bids requires extensive research and planning.
Company Overview
NGEL, a subsidiary of NTPC Ltd, is the largest renewable energy public sector enterprise in India, excluding hydro energy. As of September 2024, it has an operational capacity of 3,220 MW in solar and 100 MW in wind projects, with ambitious plans to reach 19 GW by FY27.
NTPC Ltd, a major public sector enterprise, contributes 24% of India’s power generation and aims to increase its renewable capacity to 60 GW by 2032. NGEL’s projects span across Rajasthan, Gujarat, Tamil Nadu, and Uttar Pradesh, reducing location-specific risks.
Future Prospects
NGEL owns significant land assets and benefits from low-cost capital due to its strong parentage. The company’s focus on green hydrogen, chemicals, and battery storage aligns with India’s sustainability goals, promising future growth.
At Rs108 per share, NGEL is valued at FY24 EV/EBITDA of 53.4x. Analysts recommend subscribing to the IPO for long-term gains.
Doubts Revealed
NTPC Green Energy Ltd -: NTPC Green Energy Ltd (NGEL) is a company in India that focuses on producing energy from renewable sources like wind and solar. It is a part of NTPC Ltd, which is a big company that provides electricity in India.
IPO -: IPO stands for Initial Public Offering. It is when a company sells its shares to the public for the first time to raise money for its business.
Cut-off price -: The cut-off price is the final price at which shares are sold in an IPO. It is decided after considering all the bids from investors.
GW -: GW stands for gigawatt, which is a unit of power. One gigawatt is equal to one billion watts, and it is used to measure the capacity of power plants.
FY27 -: FY27 refers to the financial year 2027. In India, a financial year starts on April 1 and ends on March 31 of the next year.
Renewable energy -: Renewable energy comes from natural sources that can be replenished, like sunlight, wind, and water. It is considered cleaner and better for the environment compared to fossil fuels.
Parentage -: In this context, parentage refers to the fact that NGEL is a part of NTPC Ltd, which is a large and well-established company. This connection can help NGEL grow and succeed.
Rs108 per share -: Rs108 per share means that each share of the company is being sold for 108 Indian Rupees during the IPO.
