NTPC Green Energy IPO to unlock value

The news that NTPC Green Energy (NGEL), a wholly-owned subsidiary of NTPC, has clearance from the Securities and Exchange Board of India (Sebi) to raise ₹10,000 crore via an initial public offering (IPO), was a trigger for the NTPC stock.

- DEVANGSHU DATTA

The stock gained 2 per cent in trade on Tuesday.

The IPO could be in November itself as NGEL had filed its draft red herring prospectus (DRHP) in mid-September 2024.

NGEL's IPO will be for fresh issue of shares.

NTPC is targeting 60 GW of renewable energy (RE) capacity by FY32 through NGEL.

NGEL has an operational capacity of 3.2 GW, 12 GW of contracted under-construction RE projects and a development pipeline of 11 GW.

NGEL will commission 3 GW, 5 GW, and 8 GW capacities in FY25, FY26 and FY27, respectively.

NGEL is looking to set up utility-scale RE projects, and tie up with corporates for captive RE requirements.

The return ratios for captive projects may be higher than utility-scale projects.

ICICI Securities estimates revenue of ₹11,700 crore and operating profit of ₹9,500-10,000 crore for the RE portfolio.

In a sum-of-the-parts analysis, a brokerage assessed NGEL's valuation contribution at ₹91 per NTPC share.

The IPO should boost that.