NTPC Green Energy Limited is a wholly owned subsidiary of NTPC Limited, a 'Maharatna' central public sector enterprise. The renewable energy portfolio encompasses both solar and wind power assets with presence across multiple locations in more than six states which helps mitigate the risk of location-specific generation variability. The operational capacity was 3,220 MW of solar projects and 100 MW of wind projects across six (6) states as of September 30, 2024. They are strategically focused on developing a portfolio of utility-scale renewable energy projects, as well as projects for public sector undertakings ('PSUs') and Indian corporates. Their projects generate renewable power and feed that power into the grid, supplying a utility or offtaker with energy. For the operational projects, they have entered into long-term Power Purchase Agreements ('PPAs') or Letters of Award ('LoAs') with an offtaker that is either a Central government agency like the Solar Energy Corporation of India ('SECI') or a State government agency or public utility. As of September 30, 2024, the 'Portfolio' consisted of 16,896 MWs including 3,320 MWs of operating projects and 13,576 MWs of contracted and awarded projects. As of September 30, 2024, their 'Capacity under Pipeline, for which a memorandum of understanding ('MOU') or term sheet has been entered with joint venture partners or offtakers but where definitive agreements have not yet been entered, consisted of 9,175 MWs. As of September 30, 2024, the Capacity under Pipeline together with the Portfolio consisted of 26,071 MWs. As of September 30, 2024, they had 17 offtakers across 41 solar projects and 11 wind projects. They define offtakers as parties with whom they have megawatts operating, contracted or awarded (signed PPA or from whom they have received an LoA). As of September 30, 2024, all 9 of the offtakers from which they earned revenue in the six months period ended September 30, 2024 were government agencies and public utilities with which they have long-term PPAs with an average term of 25 years. For solar energy projects, construction includes design, engineering, procurement, structure, module and inverter installations, substation construction, interconnection work, and the balance of plant construction. In solar projects, they have diversified the strategy for setting up power plants from using turnkey engineering, procurement, and construction ('EPC') contract model (where the contractor is responsible from concept through commissioning) to a model where they take responsibility for procurement of major equipment and supplies and the contractor builds, commissions and hands over the solar plant. They also use the turnkey EPC contract model based on specific project conditions. For wind energy projects construction includes turbine installations and the balance of plant, which encompasses transmission lines and substation. In wind projects, they generally use the turnkey EPC model, entering into contracts with OEMs for manufacturing, installing, and commissioning wind turbines and the balance of plant. However, they have also started bifurcating the total project scope into balance of plant (including procurement of land) and supply and installation of wind turbine generators. As per financial performance, NTPC Green Energy Limited has posted total income / net profits of Rs 918.24 Cr / Rs 94.74 Cr (FY22), Rs 1,457.53 Cr / 456.48 Cr (FY23), Rs 2,037.66 Cr / Rs 344.72 Cr (FY24) and Rs 1,132.74 Cr / Rs 175.30 Cr. So as per previous financials data, company has shown good growth. Company has an average EPS of Rs NA and average RoNW of 6.69% for last three fiscals. Issue is priced at a P/BV of 9.89 as per NAV of Rs 10.92/- as on 30.09.24. If we attribute latest earnings of FY23, FY24, TTM H1 FY25 and annualized FY25 on fully diluted equity post issue, then asking price is at a P/E of around 199, 264, 292 and 259 respectively, which looks very aggressively priced. As per RHP, comparison between listed peers is given in above table. On BRLM's front, four lead managers are associated with this IPO, and have handled around 58 IPOs in last three fiscals. As per financials, NTPC Green Energy Limited has shown good growth, RoNW is 5.53% and P/E is respectively 199, 264, 292 and 259 as per FY23, FY24, TTM H1 FY25 and annualized FY25 earnings. So, issue looks aggressively priced. Company is engaged in the business of renewable energy, which is highly competitive and fragmented business segmented. GoI is very focused for renewable energy and sector is expected to grow at good rate. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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