NTPC Green IPO expected to raise over ₹8,000 Crore, Check-in with the latest updates
IPO News: During a conversation with the FE, Gurdeep Singh who is the chairman and MD said that NTPC is planning to raise “a billion dollars” – which is equivalent to `8,300 crore at the present exchange rate by selling shares of its wholly-owned subsidiary NTPC Green IPO, i.e. NTPC Green IPO expected to raise over ₹8,000 Crore. According to him, the NGEL issue will come onto the market within the first half year of this financial period.
“Our balance sheet is very robust and healthy, and we can raise money easily. However, as a stated objective, we will go for 10% to start with, followed by 15% through OFS (offer for sale),” Singh said, reiterating that the green arm is expected to surpass its parent in size. The subsequent proposal will allow NGEL to fulfill the regulatory standard of a minimum of 25% public equity.
The funds raised from the NTPC Green IPO will be allocated towards NGEL’s initiatives focused on environmental sustainability and the shift towards renewable energy, such as green hydrogen and energy storage solutions. Singh mentioned that the presence of the NTPC group’s coal operations could have potentially hindered the ability of the green energy portfolio to attract enough investor trust. However, with the establishment of the public offering, the value of NGEL’s green ventures is expected to increase.
“For the green (business), which is carbon-free, people are ready to pay a higher multiple. This will result in a larger valuation, and our green arm can become bigger than NTPC in the long run,” he said.
The CMD also addressed worries that the parent company’s shares could suffer because of the NTPC Green IPO, pointing out that its price-to-earnings ratio is half that of its private counterparts, and the potential for a carbon business.
NTPC IPO Insights
The stock of NTPC fell by 1.26% to `360 on Thursday. On May 24, it fell from its all-time high of `374.85 by 3.96% over the past four days. In 2024 so far, this stock has returned 15.7% while last year alone saw it going up 103.74%.
During a recent meeting with analysts, the leadership of the company disclosed that the NTPC group is planning to invest up to `35,000-50,000 crore annually over the next two to three years, with the green sector being the primary driver in context to the NTPC Green IPO. NGEL has already chosen IDBI Capital Markets and Securities, HDFC Bank, IIFL Securities, and Nuvama Wealth Management to handle the initial public offering (IPO). The company anticipates accelerating the process by June.
NTPC has expanded its portfolio over time to include renewable energy sources such as wind, solar, hydro, nuclear, and chemicals like ethanol and methanol. Moving forward, the company plans to be more proactive in expanding its renewable and nuclear energy sectors, as well as in investigating solutions for energy storage, according to Singh.
In the realm of nuclear power, in addition to its previously announced initiative in Rajasthan, in partnership with another CPSE Nuclear Power Corporation of India, the firm is now exploring the possibility of establishing facilities in Tamil Nadu, Karnataka, and Gujarat, among other states, and is currently in the stage of scouting suitable locations and securing the necessary permits. It is expected that these plants will be developed by the company independently, without any collaborators.
See What Green IPO Sets
“We are exploring new sites for nuclear projects in Gujarat, Tamil Nadu, Jharkhand, Chhattisgarh and Karnataka. These sites will have to be approved by the Atomic Energy Regulatory Board,” Singh said.
In the fourth quarter of 2023-24, NTPC recorded a 33% rise in its consolidated net profit to `6,490.05 crore. A 24.5% gain was also noted in the net profit for Q4FY24 when compared to that of the previous quarter. She noted that the main reason for this was cash generated from subsidiaries as well as associates. NTPC has 25 joint ventures/subsidiaries.
