NTPC Green Energy Ltd IPO | Should you invest?

Summary

The NTPC Green Energy Limited IPO, open from November 19-22, 2024, aims to raise around ₹10,000 crore. As a wholly-owned subsidiary of NTPC, it focuses on renewable energy, especially solar. Despite impressive revenue growth, with the company’s revenue rising from ₹170 crore in FY 2023 to ₹2,000 crore in FY 2024, the speaker critiques the IPO’s high valuation and aggressive pricing. With a P/E ratio of 259, the speaker believes the stock may not deliver short-term gains and advises investors to be cautious, highlighting the volatility of current market conditions and aggressive IPO pricing.

Takeaways

• 😀 NTPC Green Energy Limited's IPO opened on November 19 and will close on November 22, 2024.
• 😀 The IPO aims to raise around ₹10,000 crore, making it one of the largest IPOs in recent times.
• 😀 NTPC Green Energy is a subsidiary of NTPC Limited, primarily focused on renewable energy, especially solar power.
• 😀 Solar energy is the company's main business segment, with some involvement in wind and hydro energy.
• 😀 The company is in its early stages of growth, with revenue increasing from ₹170 crore in March 2023 to approximately ₹2000 crore.
• 😀 The company's profit after tax for FY 2023 was ₹344 crore, and for the first half of FY 2024, it stood at ₹175 crore.
• 😀 The price-to-earnings (P/E) ratio for the IPO is around 259, which is considered high compared to other renewable energy companies.
• 😀 The price-to-book (P/B) value is also high, at 99.8, indicating that the stock may be overvalued.
• 😀 The funds raised from the IPO will primarily be used for repaying borrowings and general corporate purposes.
• 😀 The IPO's pricing is considered aggressive, and the high valuation could lead to limited short-term gains for investors.
• 😀 The stock may become available at lower prices in the future, given the market's volatility and the company's current growth stage.

Q & A

What is the primary business focus of NTPC Green Energy Limited?

NTPC Green Energy Limited primarily focuses on renewable energy, with a major emphasis on solar energy, and also has involvement in hydro and wind energy projects.

What is the purpose of the current IPO by NTPC Green Energy Limited?

The IPO aims to raise approximately ₹10,000 crore. The funds will be used for debt repayment and general corporate purposes.

When is the IPO for NTPC Green Energy Limited open for subscription?

The IPO is open for subscription from 19th November to 22nd November 2024.

What is the price band for the NTPC Green Energy Limited IPO?

The price band for the IPO is set between ₹102 and ₹10 per share.

How much minimum investment is required to apply for the NTPC Green Energy Limited IPO?

The minimum investment required for the IPO is ₹1,904 for one lot.

What is the financial performance of NTPC Green Energy Limited in terms of revenue and profit?

NTPC Green Energy Limited's revenue in March 2023 was ₹170 crore, which grew to approximately ₹2000 crore, with a half-yearly revenue of ₹1100 crore. The profit after tax in FY 2023 was ₹344 crore, and ₹175 crore for the most recent half-year period.

How does the valuation of NTPC Green Energy Limited compare to other companies in the sector?

The company's valuation appears quite aggressive, with a price-to-earnings (PE) ratio of 259, and price-to-book value of 10, which is relatively high compared to other similar companies in the renewable energy and PSU sectors.

What discount does the IPO offer to employees of NTPC Green Energy Limited?

Employees of NTPC Green Energy Limited are eligible for a discount on the share price, although the exact discount amount is not specified in the script.

What is the market sentiment regarding the NTPC Green Energy IPO?

The market sentiment appears cautious, with concerns about the high pricing of the shares and doubts about significant short-term gains. The IPO may face challenges similar to other recent IPOs, such as Swiggy, which did not see strong post-listing performance.

What is the general recommendation regarding the NTPC Green Energy Limited IPO?

The general recommendation is to avoid applying for the IPO, as the valuation is considered too aggressive, and the stock may trade lower post-listing due to market conditions.