NTPC Green Energy launched its IPO on November 19. It has received reasonable interest from retail investors and the issue has been fully booked within the first few hours of Day 1. The energy companies have been in focus of D-Street. Most of the energy companies that were listed recently, received massive bidding from investors including Waaree Energies and ACME Solar Holdings. But why is the grey market premium (GMP) for NTPC Green lacklustre? Is the IPO priced aggressively?
NTPC Green Energy earnings
Let’s look at the company’s earnings – In FY24, the green energy arm of NTPC reported a net profit of Rs 344.72 crore, a growth of 101% on year from Rs 171.23 crore posted in FY23. While its revenue from operations stood at Rs 1962.59 crore in FY24 against Rs 169.69 crore in FY23, up more than 11 times year-on-year. NTPC Green Energy’s operating profit margins were maintained at a three-year average of 89%. The net profit margins were also at 3-year average of 20% over FY22-24,. This was primarily on the back of effective execution and economies of scale.
NTPC targets 60GW renewable capacity by 2032
The parent company NTPC, a central public sector enterprise with ‘Maharatna’ status is focused on developing utility-scale solar and wind energy projects, as well as projects for PSUs and corporates. Plus, the company has a diversified portfolio backed by long-term PPAs (power purchasing agreements). “NGEL is well-positioned to meet NTPC’s target of 60 GW renewable capacity by 2032,” said Geojit Financial Services in an IPO note.
Industry tailwinds are surely a positive factor working for it just like they did for other renewable energy companies. “The energy demand in India is projected to grow by ~5.5-6.0% over the next five years, driven by infrastructure investments, strong economic fundamentals, T&D expansion, and government reforms to enhance the power sector,” read the note of Geojit Financial Services.
NTPC Green Energy IPO: Not much in store for NIIs
All these points might favour the company and could be the reason why the retail portion got booked within hours of the IPO launch. However, the NIIs category didn’t see much attraction. According to Bajaj Broking, although, the company has posted net profits for the reported financial periods, the IPO is considered aggressively priced based on FY25 annualised earnings.
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