NTPC Green IPO Listing: Stock lists at 3% premium over IPO price

NTPC Green IPO Listing

NTPC Green Energy IPO Listing: ₹108 Share Opens at 3% Premium, Surpassing Grey Market Concerns

The much-anticipated Initial Public Offering (IPO) of NTPC Green Energy, the renewable energy arm of India’s largest power utility NTPC Limited, made its debut on the Indian stock exchanges today.

The ₹10,000 crore IPO, which was open for subscription from November 19-22, 2024, was met with a mixture of excitement and apprehension from investors, particularly due to concerns surrounding its grey market premium (GMP), which had fallen below 1% prior to the listing.

However, the stock quickly overcame these concerns, making a strong debut with a 3% premium over the issue price and further climbing during the trading session.

By the end of the day, the stock had surged nearly 13%, delivering impressive returns to its IPO investors.

NTPC Green Energy IPO Listing: Key Details

The NTPC Green Energy IPO was priced at ₹108 per share, and the stock opened for trading today at ₹111.60 on the Bombay Stock Exchange (BSE) and ₹111.50 on the National Stock Exchange (NSE), reflecting a 3% premium over the issue price.

The initial trading activity was slow, causing some jitters among investors, especially after the grey market sentiment dipped in the days leading up to the listing.

However, the stock quickly gained traction as it climbed steadily throughout the session, eventually reaching its upper circuit limit of ₹122.75 on the BSE.

At the close of trading, NTPC Green Energy shares were priced at ₹122.10, representing a 13.06% gain from the issue price.

The quick upward movement in the stock price provided much-needed relief to IPO investors, especially given the pre-listing fears that had led to nervousness among participants.

For employees of NTPC Green Energy, the day was even more rewarding, as they had been offered shares at a discounted price of ₹103, ₹5 lower than the issue price, allowing them to book even higher gains.

Grey Market Concerns and Investor Sentiment

The grey market premium (GMP) of an IPO plays a key role in shaping investor sentiment ahead of listing.

In the case of NTPC Green Energy, the GMP had slipped below 1% in the grey market in the days leading up to the listing, sparking concerns that the IPO might not deliver the expected listing gains.

This was in contrast to other high-profile IPOs that had generated strong demand and positive GMP ahead of listing.

The dip in the GMP led to speculation that there might be a tepid response once the shares began trading publicly.

Despite these concerns, NTPC Green Energy’s shares opened at a 3% premium, offering investors an immediate positive return.

This strong start was followed by steady buying interest, with the stock climbing further throughout the day.

The movement in the stock price confirmed the strong fundamentals of the company and the market’s positive outlook for the renewable energy sector, which is experiencing rapid growth as India pushes for greater clean energy adoption.

IPO Subscription Details and Demand Insights

The NTPC Green Energy IPO was met with a mixed response, with the overall issue being subscribed 2.55 times.

The subscription levels varied significantly across different investor categories, with some categories seeing strong demand and others more subdued interest. The detailed subscription figures were as follows:

• Qualified Institutional Buyers (QIBs): Subscribed 3.51 times, indicating strong institutional interest in the offering.
• Non-Institutional Investors (NIIs): Subscribed 0.85 times, reflecting a lower demand from high-net-worth individuals and corporate investors.
• Retail Investors: Subscribed 3.59 times, showing strong enthusiasm among individual investors, likely driven by the appeal of investing in a leading renewable energy company.
• Employees: Subscribed 0.83 times, which was relatively modest, although employees were still given a chance to purchase shares at a discount.
• NTPC Shareholders: Subscribed 1.67 times, reflecting a fair level of interest from existing NTPC shareholders who had a reserved portion in the IPO.

A total of 925,925,926 new equity shares were issued as part of the IPO, each with a face value of ₹10.

The company reserved ₹200 crore worth of shares for employees, and ₹1,000 crore worth of shares for NTPC shareholders, underlining its commitment to including stakeholders from across its ecosystem in the offering.

The funds raised from the IPO will primarily be utilized to reduce the debt of NTPC Renewable Energy, a subsidiary of NTPC Green Energy.

A substantial ₹7,500 crore will be directed toward debt reduction, while the remaining funds will be used for general corporate purposes, including future project development and working capital requirements.

NTPC Green Energy: A Key Player in India’s Renewable Energy Future

NTPC Green Energy is India’s largest state-owned renewable energy company, excluding hydroelectric power, in terms of both installed capacity and power generation.

As of September 2024, the company’s operational renewable energy capacity includes 3,220 MW of solar power and 100 MW of wind power. NTPC Green Energy also boasts an average power purchase agreement (PPA) duration of 25 years, providing significant revenue visibility and stability.

The company is strategically positioned to capitalize on India’s growing renewable energy sector. It is targeting a total renewable energy capacity of 60 GW by FY 2032.

As of now, it has an installed capacity of 3.5 GW and an additional 28 GW under development, positioning it to play a pivotal role in India’s ambitious clean energy goals.

Strong Financial Performance

NTPC Green Energy’s financial performance has demonstrated impressive growth in recent years. For the financial year 2023, the company reported a net profit of ₹171.23 crore, which more than doubled to ₹344.72 crore in FY 2024.

This sharp increase in profits was driven by a substantial growth in revenue, which surged from ₹170.63 crore in FY 2023 to ₹2,037.66 crore in FY 2024.

The company’s revenue growth is a clear indicator of the expanding scale of its operations and its success in monetizing its renewable energy assets.

In the first half of FY 2024-25 (April to September 2024), NTPC Green Energy continued its strong performance, achieving a net profit of ₹175.30 crore and revenue of ₹1,132.74 crore.

This trend underscores the company’s consistent growth trajectory and robust financial health, which will be key to supporting its future expansion plans.

The Road Ahead: Expanding Green Energy Capacity

NTPC Green Energy’s focus on expanding its renewable energy capacity is central to its long-term growth strategy.

With the Indian government setting aggressive targets for renewable energy generation, including a target of 50% of energy coming from renewable sources by 2030, NTPC Green Energy is well-positioned to benefit from these policy initiatives.

As the company continues to scale its operations, it will play a critical role in supporting India’s transition to a low-carbon economy.

Investors looking for exposure to the rapidly growing renewable energy sector may find NTPC Green Energy to be an attractive option, particularly as the company embarks on its ambitious journey to reach 60 GW of renewable energy capacity by 2032.

Final Remarks

The listing of NTPC Green Energy on the stock exchanges has been a positive development for both the company and its investors.

Despite early concerns over the grey market premium, the stock’s strong debut and subsequent growth in price highlight investor confidence in the company’s prospects.

As NTPC Green Energy continues to expand its renewable energy portfolio, it is well-positioned to benefit from India’s growing demand for clean energy, making it an attractive proposition for long-term investors.