NTPC Green Energy IPO DRHP: Key strengths and risks you need to know

SUMMARY

NTPC Green Energy IPO is only a fresh issue of equity shares, and there is no offer-for-sale component, meaning that existing investors will not sell any stake.

NTPC Green Energy is a a 'Maharatna' central public sector enterprise.

NTPC Green Energy IPO DRHP: NTPC Green Energy, a renewable energy subsidiary of state-run NTPC, has filed preliminary papers with the markets regulator, the Securities and Exchange Board of India, for its mega ₹10,000 crore initial public offering (IPO).

NTPC Green Energy IPO is only a fresh issue of equity shares, and there is no offer-for-sale component, meaning that existing investors will not sell any stake.

The fresh issue proceeds, totaling ₹7,500 crore, will be used for debt repayment of its subsidiary NTPC Renewable Energy Ltd and general corporate purposes.

NTPC Green Energy IPO: Strengths

• The company is promoted by NTPC, which has extensive experience handling large-scale projects, long-term relationships with suppliers and off-takers, and financial strength.

  
  

• Experienced in renewable energy project execution, procurement, operation, and maintenance.

  
  

• Its portfolio of operating solar and wind projects has yielded growth in revenues and EBITDA with solid credit ratings that enable a low cost of capital employed.

  
  

• Experienced management team

NTPC Green Energy IPO: Risks

• There is a concentrated pool of utility firms and power purchasers for the electricity generated by NTPC Green Energy's plants and projects. The company derived over 87% of its revenue from its top five off-takers in the financial year 2023-24. The renewable energy firm's single largest off-taker contributed around 50% of revenue from operations in FY24.

  
  

• Business and profitability depend on the availability and cost of solar cells, solar modules, wind turbine generators, and other materials. Equipment requirements are also dependent on third-party suppliers.

  
  

• Renewable energy project construction activities might be subject to cost overruns or delays, adversely affecting business.

  
  

• Operating renewable energy projects are concentrated in Rajasthan. Any social, political, seasonal of economic disruption can affect business.