NTPC Green Energy IPO: Date, price band, investment potential and key risks to watch

NTPC Green Energy Ltd. will launch its highly anticipated initial public offering (IPO) on Tuesday, aiming to raise Rs 10,000 crore through a fresh issue of approximately 92.6 crore shares. 

The offering is set to make waves as one of India’s largest IPOs this year, following Hyundai Motor India Ltd. and Swiggy Ltd. The company’s anchor book will be available for subscription on Monday.

Priced between Rs 102 and Rs 108 per share, the IPO positions NTPC Green Energy at a market capitalization of Rs 91,000 crore at the upper range. Out of the total offering, 75% is reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 10% for retail investors. 

For retail bidders, the limit is set at Rs 2 lakh; however, NTPC shareholders can bid up to Rs 4 lakh under a special reservation.

The IPO proceeds will primarily target debt reduction, with 75% of the Rs 10,000 crore raised to go toward repaying debt. NTPC Green Energy Ltd. (NGEL), a renewable energy arm under NTPC Ltd., has ambitious growth plans that include expanding its portfolio to include battery storage systems, hybrid energy projects, and the development of a green hydrogen hub in Andhra Pradesh.

Founded in 2022, NGEL currently manages a total renewable energy portfolio of 25.67 gigawatts (GW), with 2.93 GW in operation. The portfolio includes 20.32 GW in solar capacity and 5.35 GW in wind power. 

Financially, the company has recorded strong progress this fiscal, achieving 51% of its last year’s revenue within the first half alone. Upcoming projects could bring capacity additions of 3 GW this fiscal and 8 GW by fiscal 2027.

As of fiscal 2024, the company faced some key operational risks. Over 87% of NGEL’s revenue is dependent on its top five clients, with one client contributing around half of its revenue. 

Additionally, most of NGEL’s renewable energy projects are concentrated in Rajasthan, making them potentially vulnerable to regional disruptions. Supply chain challenges and volatility in raw material prices are also potential risks for the company as it scales operations in the coming years.