NTPC Green Energy IPO allottees may see muted listing gains on Wednesday; analysts see 'opportunity for long-term investors'

NTPC Green Energy is a 'Maharatna' central public sector enterprise with a renewable energy portfolio, including solar and wind power assets.

NTPC Green Energy shares are set to debut on the stock exchanges on Wednesday, November 27.

Despite ongoing market volatility, the company’s initial public offering (IPO) garnered decent interest, particularly from non-institutional investors (NII) and retail segments, reflecting optimism about its growth potential.

The IPO, which closed on November 22, was subscribed 2.42 times, underscoring investor confidence in the renewable energy arm of NTPC.

Shivani Nyati, Head of Wealth at Swastika Investmart Ltd, noted that NTPC Green Energy holds a strategic position in the renewable energy market, making it an attractive choice for long-term investors. However, she advised caution for short-term traders, citing modest grey market premium (GMP) signals and concerns over aggressive valuations.

"The company’s diversified portfolio across geographies and offtakers is a key strength," Nyati added. Despite consistent revenue growth, temporary fluctuations in profitability and margins remain a challenge. Currently, the GMP of Rs 1.5 (1.39%) hints at limited listing gains.

Manish Chowdhury, Head of Research at StoxBox, projected a stable listing, with the stock expected to open around 3 percent higher than the upper price band. "Given its robust financials and strategic development, investors who received allotments should consider holding the stock for medium to long-term growth," Chowdhury said.

NTPC: What next for the stock with NTPC Green Energy IPO done?

The company operates one of the largest renewable energy portfolios among public sector enterprises (excluding hydro), with a capacity of 3,220 MW of solar projects and 100 MW of wind projects across six states.

Financially, NTPC Green Energy has demonstrated strong growth, with revenue increasing at a compound annual growth rate (CAGR) of 46.82 percent between FY22 and FY24, reaching Rs 19,625.98 million. The profit after tax (PAT) margin stood at 17.56 percent in FY24, while return on equity (RoE) was 17.76 percent.

Manish Chowdhury highlighted the company’s solid fundamentals, noting its revenue streams are supported by Power Purchase Agreements (PPAs) with Indian government agencies and public utilities. "The renewable energy sector is expanding rapidly, and NTPC Green Energy is well-positioned to capitalise on this trend," he added.

Prashanth Tapse, Senior Vice President at Mehta Equities, echoed similar views. "The IPO offers a chance to invest in a leading renewable energy firm backed by NTPC Ltd. However, short-term gains may be limited due to prevailing market conditions," he said. Tapse recommended a long-term hold strategy for allotted investors and suggested non-allotted investors accumulate the stock if it lists near the issue price.

Narendra Solanki and Gaurav Garg, research analysts from Anand Rathi and Lemonn Markets, respectively, also advised investors to focus on the long-term growth story of the company.

With India ranking fourth globally in total renewable energy capacity, NTPC Green Energy is poised to benefit from the country’s ambitious clean energy targets. Analysts agree that the company’s long-term prospects remain promising, making it a strong candidate for patient investors seeking exposure to the renewable energy sector.

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