NTPC Green Energy IPO Update: November 14, 2024
As the NTPC Green Energy IPO edges closer, the latest details and market activity offer insights for potential investors. The IPO is set to open on November 19 and will close on November 22, 2024, with listing expected on November 27. This major public issue aims to raise ₹10,000 crore through a fresh issue of shares, with no offer-for-sale component. Priced in the range of ₹102 to ₹108 per share, there is an additional ₹5 discount per share for NTPC employees, and a reservation for shareholders of NTPC Limited totaling ₹1,000 crore.
The company, NTPC's renewable energy arm, currently leads India’s renewable sector among PSUs with 3,320 MW of operational projects as of September 30, 2024. With an extensive portfolio of 16,896 MW and further projects in the pipeline, NTPC Green Energy’s prospects are promising, though market volatility has impacted investor sentiment, as reflected in the recent decline of the grey market premium (GMP), which has dropped from ₹25 to ₹9.
This article explores everything you need to know about the NTPC Green Energy IPO, from detailed IPO financials to investment trends in PSU stocks. Make sure to read the Draft Red Herring Prospectus (DHRP) and assess the company's long-term value before making an investment decision.
Is NTPC Green Energy the right fit for your portfolio? Read on to explore the potential rewards and risks!
What is NTPC Green Energy?
NTPC Green Energy Limited (NGEL) is a subsidiary of NTPC, India's largest energy conglomerate. NGEL represents the company’s aggressive pivot toward renewable energy, focusing on solar, wind, and hydroelectric power generation. This IPO is being seen as a strategic step to fund its green initiatives, a move in sync with India's commitment to clean energy and reducing carbon emissions. Many investors who missed out on the allotments for the Bajaj Housing Finance IPO, would be eyeing this major public issue. Especially since it garnered record applications, due to which several people missed the opportunity. Apart from AFCONS, this IPO could be the last mega public issue of shares in 2024.
While NTPC’s legacy has been built on coal-based power plants, the future is clearly tilting toward cleaner, renewable sources. NGEL hopes to tap into this growing sector and attract environmentally conscious investors.
What’s the story behind NTPC’s share price?
NTPC has been a cornerstone in India’s public sector unit (PSU) ecosystem since its establishment in 1975. It went public in 2004, and since then, its shares have been a steady performer, though not without volatility. Historically, NTPC shares have been a go-to for conservative investors due to the company’s government backing, making it a relatively stable choice compared to high-risk, high-return stocks.
In terms of dividend yield, NTPC has been a reliable player, offering consistent dividends, making it a favourite among income-focused investors. Over the past five years, NTPC has paid dividends ranging from ₹5 to ₹6 per share annually. Not earth-shattering, but steady. With NGEL, investors will wonder if they can expect the same kind of reliability from a renewables arm.
What has been the trend of PSU stocks in India?
Public Sector Units (PSUs) have a unique place in India’s stock market. For decades, they were considered the safe haven for risk-averse investors. After all, these companies were backed by the government—how much safer could it get? However, the last decade has seen PSU stocks falter due to bureaucratic inefficiencies, government interference, and a lack of innovation.
That said, there have been signs of a turnaround. The government's renewed focus on disinvestment and privatisation, coupled with the promise of higher dividends, has made some PSU stocks attractive again. Still, the big question looms: Can NTPC Green Energy buck the trend and thrive where others have floundered?
What Are the Key Dates to Remember About the NTPC Green Energy IPO?
When investing in an IPO, timing is crucial. For NTPC Green Energy, here are some important dates to mark on your calendar:
- **Issue Opening Date**: []
- **Issue Closing Date**: []
- **Allotment Date**: []
- **Listing Date**: []
Keep an eye on these dates to ensure you don't miss your window if you’re considering applying.
What about the IPO Financials and the Book Running Managers?
In an IPO, the devil is in the details—or more precisely, the Draft Red Herring Prospectus (DHRP). While final financial figures are yet to be released for NTPC Green Energy, early estimates suggest the IPO could raise between ₹3,000 and ₹5,000 crore, with most of the funds earmarked for new renewable projects.
The Book Running Lead Managers (BRLMs) for the IPO include some of the big names like ICICI Securities, Axis Capital, and SBI Capital Markets.
What Happened with the GIC IPO? Why Should You Care?
If you’ve been following PSU IPOs, the GIC (General Insurance Corporation) IPO debacle of 2017 is likely fresh in your mind. What started with high hopes soon turned into a nightmare for investors. GIC shares debuted at a slight premium but have since plunged nearly 60%, leaving thousands of investors nursing losses. The government’s miscalculated pricing and lack of market demand were partly to blame.
What’s the lesson here? Not all PSU IPOs are a surefire win. Investors must tread carefully and do their homework, especially with sectors as volatile as energy.
How Have PSU IPOs Fared in the Last Five Years?
A quick glance at the last five years reveals a mixed bag of performance for PSU IPOs:
IRCTC IPO (2019): This one was a blockbuster, with shares soaring nearly 300% from its issue price. The success was largely attributed to its monopoly in railway ticketing.
MSTC IPO (2019): The less said, the better. MSTC shares have struggled, currently trading below their issue price.
Rail Vikas Nigam Limited (2019): Like IRCTC, RVNL has done well, currently up over 150% from its issue price.
LIC - We all know that story!
These examples show that while some PSU IPOs have rewarded investors, others have floundered. The sector, management quality, and market timing play a crucial role in determining success.
What are the positives of the NTPC Green Energy IPO?
1. **Strong Parentage**: NTPC’s solid reputation will provide credibility and a potential safety net for NGEL.
2. **Renewable Energy Focus**: With global emphasis on green energy, the sector is poised for growth.
3. **Government Backing**: Like most PSUs, NGEL will benefit from government policies promoting renewable energy.
4. **Dividend Potential**: If NGEL follows NTPC’s footsteps, dividends could be an attractive feature for long-term investors.
What are the negatives of the NTPC Green Energy IPO?
1. **Sector Volatility**: Renewable energy, while promising, is still subject to market forces, including policy changes and fluctuating energy prices.
2. **Government Interference**: As a PSU, NGEL may suffer from inefficiencies tied to government oversight.
3. Previous PSU IPO disappointments: As seen with GIC and others, not all PSU IPOs live up to their expectations.
What should you do?
Now comes the million-dollar question: Should you apply for the NTPC Green Energy IPO?
The simple answer: **Do your research**. While NTPC Green Energy holds promise, it is essential to read the Draft Red Herring Prospectus (DHRP) carefully, assess your risk appetite, and only invest if the company’s financials and growth prospects align with your long-term goals. Remember, this article is not a recommendation to apply or avoid—it’s just a guide to help you make an informed decision.
FAQs
1. What is the NTPC Green Energy IPO?
NTPC Green Energy Limited's IPO is a public offering for its renewable energy-focused subsidiary, aimed at raising capital for green projects.
2. Is NTPC Green Energy a good investment?
The renewable energy sector has growth potential, but like all investments, it comes with risks. Make sure to study the company's financials and sector outlook before deciding.
3. How can I apply for the NTPC Green Energy IPO?
Investors can apply through their Demat accounts or via IPO applications available through banks and brokers.
Final Thoughts
Investing in the NTPC Green Energy IPO is an opportunity to be part of India's renewable energy story, but it's not without risks. Evaluate your financial goals, read the DHRP, and keep an eye on market trends before making any moves.
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*About Tushar Mangl*: Writes on personal finance, real estate, business, business leisure activities, and a greener, better society. Speaker, author of *Hey Honey Bunch*, *Ardika*, and *I Will Do It*.
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