New Delhi
The Initial Public Offering (IPO) of NTPC Green Energy Ltd (NGEL) is set to open on November 19. According to SBI Securities’ latest report, the company presents strong growth potential, and analysts recommend subscribing to the IPO at the cut-off price for long-term gains.
NGEL, a wholly owned subsidiary of NTPC Ltd, is the largest renewable energy public sector enterprise (excluding hydro energy) in India, with a robust operational capacity. As of September 2024, it has 3,220 MW of solar and 100 MW of wind projects, with another 13,576 MW contracted and 9,175 MW in the pipeline. The company aims to scale its operational capacity to 19 GW by FY27.
While NGEL has significant growth prospects, there are some risks, particularly regarding its reliance on imported solar panels and other components without long-term supply contracts. This exposes the company to potential supply chain disruptions. Additionally, the company’s operational concentration in Rajasthan (62.2% of its projects) poses regional risks.
NGEL is also dependent on a small number of power purchasers, which has accounted for over 97% of its revenue. The success of its future projects depends heavily on competitive bidding, timely project execution, and the company’s ability to manage cost overruns.
At the upper price band of Rs 108 per share, NGEL is valued at an FY24 EV/EBITDA of 53.4x. Given the company’s long-term growth prospects and strong foundation, analysts recommend subscribing to the IPO for potential gains in the renewable energy sector.
