India is all set to witness the third-largest IPO of 2024, which also marks the biggest IPO in the renewable energy sector. This milestone is brought to us by NTPC Green Energy Limited (NTPC GEL), a subsidiary of NTPC Limited, the country’s largest power generation company. NTPC itself contributes nearly 25% of India’s electricity supply, making this IPO a significant event in the energy sector.

About NTPC Green Energy Limited

Established in April 2022, NTPC Green Energy Limited aligns with NTPC’s vision of promoting clean and sustainable energy. It operates as a Central Public Sector Enterprise (CPSE) under the Ministry of Power. NTPC GEL primarily focuses on solar and wind energy projects spread across various Indian states.

As of August 2024, NTPC GEL boasts an operational capacity of 3,171 MW, comprising:

  • 3,071 MW from solar projects
  • 100 MW from wind projects

These projects are diversified across six states, ensuring risk mitigation while contributing to India’s clean energy goals.

Key Details of NTPC Green Energy IPO

  • IPO Size: ₹10,000 crores
  • Price Band: ₹102 to ₹108 per share
  • Subscription Dates: November 19, 2024, to November 22, 2024
  • Minimum Lot Size: 138 shares

The proceeds from this IPO will be utilized to:

  1. Invest in NTPC Renewable Energy Limited (NREL)
  2. Repay or prepay certain outstanding borrowings (partial or full)
  3. Meet general corporate purposes

Government Support Fuels NTPC GEL’s Growth

NTPC GEL enjoys strong backing from the Indian government’s renewable energy initiatives, which are pivotal for its growth. India aims to achieve a 500 GW renewable energy capacity by 2030, and NTPC GEL plays a critical role in this mission. Programs like the National Green Hydrogen Mission and Production-Linked Incentives (PLI) for solar projects further boost the company’s expansion plans.

This synergy between government policies and NTPC GEL’s vision strengthens its long-term growth potential.

Rapid Growth and Financial Performance

NTPC GEL has leveraged its parent company’s resources and initial assets to achieve remarkable growth:

  • Revenue skyrocketed from ₹169.69 crores in 2023 to ₹1,962.60 crores in 2024, marking an impressive 1,057% growth.
  • Solar energy contributes 93.77% to its revenue, while wind energy adds 2.40%.

Is NTPC GEL Outperforming its Peers?

When compared to competitors like Adani Green, NTPC GEL stands out with stronger margins and financial stability:

  • EBITDA Margin (FY24): NTPC Green – 89%, Adani Green – 82.3%
  • PAT Margin (FY24): NTPC Green – 17.6%, Adani Green – 13.7%
  • Debt Ratio (FY24): NTPC Green – 1.98, significantly lower than Adani Green’s 5.52, indicating better equity funding

Key Strengths and Challenges of NTPC Green Energy 

Strengths:

  1. Strategic Land Bank: NTPC GEL holds 54,000 acres, including leased land, for renewable projects
  2. Strong Partnerships: Collaborations with Indian Oil Corporation and other PSUs bolster its network
  3. Stable Revenue Streams: Long-term Power Purchase Agreements (PPAs) with 17 offtakers ensure consistent revenue

Challenges:

  • Dependency on Third-Party Suppliers: Unlike Adani Green, which has an integrated value chain, NTPC Green relies heavily on external suppliers, increasing supply chain risks
  • Regional Concentration: With 61.74% of projects in Rajasthan, the company faces potential risks from disruptions in one region

Future Plans and Expansion of NTPC GEL

Looking ahead, NTPC GEL aims to:

  • Increase its non-fossil capacity to 45-50% of its portfolio
  • Achieve a massive 60 GW renewable energy capacity by 2032

NTPC GEL appears to have ambitious plans to lead the way in sustainable energy development.