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NTPC Green IPO update
NTPC aims to raise around “a billion dollars”—over ₹8,300 crore at the current exchange rate—through the initial public offering (IPO) of its wholly-owned subsidiary, NTPC Green Energy (NGEL), chairman and MD Gurdeep Singh told FE. The NGEL issue is scheduled to hit the market early in the second half of the current fiscal year, Singh added.
“Our balance sheet is very robust and healthy, and we can raise money easily. However, as a stated objective, we will start with 10% through the IPO, followed by 15% through an offer for sale (OFS),” Singh said. He added that the green arm is expected to outgrow the parent company. The follow-on offer will enable NGEL to meet the regulatory requirement of a minimum 25% public float. The IPO proceeds will be used for NGEL’s green and energy transition projects, including green hydrogen and energy storage technologies.
Singh noted that because of NTPC group‘s coal business, the green energy portfolio might not have inspired sufficient investor confidence. But once the public float is in place, the valuation of the green business under NGEL would see an improvement.
“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 allayed concerns that the parent stock might take a hit due to the green IPO, citing that its P/E ratio is half that of private peers, and the promise of the carbon business.
The share price of NTPC fell 1.26% to ₹360 on Thursday. The stock corrected by 3.96% in the past four days from its all-time high of ₹374.85 on May 24. To date in 2024, the stock has returned 15.7%, while over the past year it surged by 103.74%.
In a recent analyst call, the company management revealed NTPC group has annual capex plans of ₹35,000-50,000 crore over the next 2-3 years, with the green segment driving it. NGEL has already assigned IDBI Capital Markets and Securities, HDFC Bank, IIFL Securities, and Nuvama Wealth Management to manage the IPO. The company is expected to expedite the process after June.
Over the years, NTPC has diversified into renewable energy sources, including wind, solar, hydro, nuclear energy, and chemicals like ethanol and methanol. Going forward, the company plans to be more aggressive in increasing its renewable and nuclear energy capacity while exploring energy storage solutions, Singh said.
In nuclear energy, apart from its announced project in Rajasthan (in collaboration with fellow CPSE Nuclear Power Corporation of India), the company is now looking to set up plants in Tamil Nadu, Karnataka, and Gujarat, among other states, and is in the process of identifying potential sites and obtaining requisite approvals. These units are likely to be set up by the company independently rather than with partners.
“We are exploring new sites for nuclear projects in Gujarat, Tamil Nadu, Jharkhand, Chhattisgarh, and Karnataka. These sites will need approval from the Atomic Energy Regulatory Board,” Singh said.
NTPC posted a 33% year-on-year increase in its consolidated net profit for the fourth quarter of 2023-24 to ₹6,490.05 crore. On a sequential basis, the net profit increased by 24.5% in Q4FY24. Singh attributed this to cash flows generated by subsidiaries and joint ventures. NTPC has 25 subsidiaries/joint ventures.
The NTPC Group plans to have an operational renewable energy capacity of 60 GW by 2032, sharply up from the current 3.6 GW, with most new capacities to be built via tariff-based competitive bidding. It has targeted 3 GW of renewable energy capacity in 2024-25, intending to add 5 GW and 8 GW of renewable capacities in FY26 and FY27, respectively. The company previously stated that in the next three years, it aims to add 22.5 GW of cumulative installed power capacity, including nuclear energy, pump storage plants, thermal, and renewable power.
The company is also eyeing new thermal orders with a total capacity of 15.2 GW in the coming years. In FY25, the company intends to award thermal projects totaling a capacity of 10.4 GW. It also expects to commission 2.8 GW of thermal capacity in FY25 and another 1.5 GW in FY26.
