NTPC Green Energy IPO: Marwadi Financial Services assigns subscribe rating to NGEL IPO

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NTPC Green Energy Ltd. (NGEL), the renewable energy arm of NTPC, has launched its initial public offering (IPO) to raise ₹10,000 crore. The issue was subscribed 33 per cent so far and concludes on November 22, 2024.

Marwadi Financial Services has issued a “Subscribe” rating for the IPO, citing the company’s strong parentage, robust project portfolio, and financial stability.

IPO details

The issue price has been set at ₹102–₹108 per share, with a lot size of 138 shares.

Competitive Positioning

Marwadi Financial Services highlights NTPC Green Energy’s competitive advantages, including NTPC Limited’s extensive experience in executing large-scale projects and its long-standing relationships with offtakers and suppliers. The company’s geographic and offtaker diversification further bolsters its position in the renewable energy sector.

Despite the advantages, the IPO valuation stands at a price-to-earnings (P/E) ratio of approximately 208x on a trailing 12-month basis, higher than industry peer Adani Green Energy’s 182x. NGEL’s FY24 total revenue was ₹2,038 crore, with an EBITDA margin of 8.4%.

Risks and Concerns

Marwadi Financial Services has flagged potential risks, including construction delays and cost overruns in renewable energy projects, which could adversely affect the company’s financial performance. Fixed tariff agreements and exposure to regulatory changes are additional concerns for investors.

Investment Outlook

While the high valuation raises caution, Marwadi Financial Services believes the IPO presents an attractive opportunity, supported by the company’s market leadership, experienced management, and pipeline of renewable projects. The brokerage firm recommends the IPO for investors seeking long-term exposure to India’s growing renewable energy sector.

(This article was generated using AI and was reviewed by a journalist)