NTPC would seek to raise around “a billion dollars” – over `8,300 crore – at current exchange rate through the initial public offering (IPO) of its wholly-owned subsidiary NTPC Green Energy (NGEL), chairman and MD Gurdeep Singh told FE. The NGEL issue is scheduled to hit the market early in the second half of the current fiscal, Singh added.
“Our balance sheet is very robust and healthy, and we can raise money easily. However, as a stated objective, we will go for 10% to start with, followed by 15% through OFS (offer for sale),” Singh said, adding that the green arm is tipped to outgrow the parent. The follow-on offer will enable NGEL to meet the regulatory requirement of minimum 25% public float.
The IPO proceeds would be used for NGEL’s green and energy transition projects, including in the areas of green hydrogen, energy storage technologies.
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Singh noted that because of the NTPC group’s coal business, the green energy portfolio might not have been able to inspire sufficient investor confidence. But once the public float is in place, the valuation of green business under NGEL would see an improvement.
“For the green (business), which is carbon-free, people are ready to pay a higher multiple. This will result in larger valuation and our green arm can become bigger than NTPC in the long run,” he said. The CMD also allayed concerns that the parent stock might take a hit due to the green IPO, citing that its P/E ratio is half that of private peers, and the promise of carbon business.
The share price of NTPC fell 1.26% to `360 on Thursday. The stock corrected by 3.96% in the past four days from its all-time high of `374.85 on May 24. To date in 2024, the stock has gave return of 15.7% while in the past year it surged by 103.74%
In a recent analyst call, the company management revealed NTPC group having annual capex plans of `35,000-50,000 crore over the next 2-3 years, with the green segment driving it.
NGEL has already assigned IDBI Capital Markets and Securities, HDFC Bank, IIFL Securities and Nuvama Wealth Management to manage the IPO. The company is expected to expedite the process after June.
NTPC has over the years diversified into renewable energy sources, including wind, solar, hydro, nuclear energy, and chemicals like ethanol and methanol. Going ahead, the company would be more aggressive in increasing its renewable and nuclear energy along with exploring energy storage solutions, Singh said.
In nuclear energy, apart from its announced project in Rajasthan (in collaboration with fellow CPSE Nuclear Power Corporation of India), the company is now looking to set up plants in Tamil Nadu, Karnataka and Gujarat, among other states, and is in the process of identifying potential sites and getting requisite approvals. These units are likely to set up by the company on its own, rather than with partners.
“We are exploring new sites for nuclear projects in Gujarat, Tamil Nadu, Jharkhand, Chhattisgarh and Karnataka. These sites will have to be approved by the Atomic Energy Regulatory Board,” Singh said.
NTPC posted a 33% year-on-year jump in its consolidated net profit in the fourth quarter of 2023-24 to `6,490.05 crore. On a sequential basis, the net profit increased by 24.5% in Q4FY24. Singh attributed this to cash flows generated by subsidiaries and joint ventures. NTPC has 25 subsidiaries/joint ventures.
NTPC Group plans to have an operational renewable energy capacity of 60 GW by 2032, sharply up from 3.6 GW at present, with the bulk of the new capacities to be built via tariff-based competitive bidding. It has targeted 3 GW of RE capacity in 2024-25, and intends to add 5 GW and 8 GW of RE capacities in FY26 and FY27. The company had earlier stated that in the next three years, it would seek to add 22.5 GW cumulative installed power capacity, including nuclear energy, pump storage plants, thermal and renewable power.
The company is also eyeing new thermal orders with a total capacity of 15.2 GW in coming years. In FY25, the company intends to award thermal projects totaling a capacity of 10.4 GW. It also expects to commission 2.8 GW of thermal capacity in FY25 and another 1.5 GW in FY26.
From: financialexpress
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