NTPC shares jump 4% after renewable arm files IPO to raise ₹10,000 cr

Shares of state-owned National Thermal Power Corporation (NTPC) rallied over 4% to touch its 52-week high on Thursday after its renewable energy arm, NTPC Green Energy, filed a preliminary document with SEBI to raise ₹10,000 crore via initial public offering (IPO) route. As per the draft red herring prospectus (DRHP) filed with the capital market regulator, the highly-anticipated IPO, which is touted to be India’s largest in 2024, is completely a fresh issue of equity shares, with no offer for sale component.

Boosted by the development, NTPC shares gained as much as 4.3% to hit a new 52-week high of ₹431.85 on the BSE. The energy heavyweight opened higher at ₹425.50 after ending 0.58% lower at ₹413.85 in the previous session.

At the time of reporting, shares of NTPC were trading at ₹428.45, up 3.53%, with a market capitalisation of ₹4.15 lakh crore. The stock of the country’s largest power company has nearly doubled from its 52-week low of ₹227.75 touched on October 26, 2023. The stock has delivered 78% returns in the last one year; 39% in the calendar year 2024; 37% in past six months; and nearly 7% in a month.

NTPC Green Energy to raise ₹10,000 cr via IPO

NTPC Green Energy, a wholly-owned subsidiary of NTPC, filed its DRHP with the SEBI on September 18, 2024, to list its shares on the domestic bourses. The company looks to raise ₹10,000 crore via IPO, which will be completely a fresh issue of equity shares.

NTPC Green Energy, a 'Maharatna' central public sector enterprise, intends to use IPO proceeds to invest in its wholly owned subsidiary, NTPC Renewable Energy, to repay its certain debts. A part of the fund will be used to meet general corporate purposes. 

As per the DRHP, the company will use 75% of the raised capital (₹7,500 crore) to clear debts availed by NTPC Renewable Energy Limited (NREL). As per the IPO document, NREL has entered into various borrowing arrangements, including borrowings in the form of term loans and various fund-based and non-fund based working capital facilities. As on July 31, 2024, the company had outstanding borrowings (fund based) of ₹16,235 crore on a consolidated basis.

NREL is the largest renewable energy public sector enterprise (excluding hydro) in terms of operating capacity as of June 30, 2024 and power generation in Fiscal 2024, as per CRISIL report cited in the DRHP. The operational capacity was 3,071 MW of solar projects and 100 MW of wind projects with presence in more than six states.

As of June 30, 2024, the company’s portfolio consisted of 14,696 MWs, including 2,925 MWs of operating projects and 11,771 MWs of contracted and awarded projects. It had 15 offtakers, including government agencies and public utilities, across 37 solar projects and 9 wind projects.

For the financial year 2023-24, NREL posted revenue from operations at ₹1,962.6 crore and profit after tax at ₹344.72 crore. The operating EBITDA for the fiscal was ₹1,746.47 crore, while the margin stood at 88.99%. 

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