NTPC Green IPO to open on Nov 19th, can be subscribed for long term gains: SBI Securities

The Initial Public Offering (IPO) of NTPC Green Energy Ltd (NGEL) is acceptable to unfastened connected November 19, SBI Securities successful its latest study says fixed the company's robust maturation potential, analysts urge subscribing to the IPO astatine the cut-off terms for semipermanent gains.

'We urge investors to subscribe to the contented astatine cut-off terms for agelong term." said the report

However. it cautioned that NGEL depends connected imported star panels and different components without semipermanent contracts, making it susceptible to proviso concatenation disruptions. Timely execution of its contracted projects volition beryllium a situation for the institution that could interaction its fiscal performance.

"The institution is substantially babelike connected the availability and outgo of star modules, star cells, upwind turbine generators and different materials, components and instrumentality for its solar, upwind and different projects. The institution purchases large components specified arsenic star panels, inverters, upwind turbines and immoderate components of powerfulness evacuation systems straight from a fig of home and planetary manufacturers and does not person immoderate agelong word proviso contracts with them," said the report.

Investors should besides see risks similar a ample information of NGEL's operational projects (62.2 per cent) is concentrated successful Rajasthan, exposing it to determination risks. The institution relies heavy connected a constricted fig of powerfulness purchasers, which accounted for implicit 97 per cent of its gross successful caller years.

"The institution is babelike for winning competitory bids for renewable vigor projects which necessitate extended research, planning, owed diligence and capableness to run with debased operating margins for sustained play of time. Future maturation of the institution is importantly babelike connected palmy execution of contracted & awarded projects. Any cost-overruns oregon nonaccomplishment to successfully execute projects whitethorn adversely interaction business, results of operations and fiscal information of the company."

NGEL, a wholly owned subsidiary of NTPC Ltd, is the largest renewable vigor nationalist assemblage endeavor (excluding hydro energy) successful presumption of operating capableness arsenic of September 2024.

As of September 2024, the company's operational capableness was 3,220 MW of star and 100 MW of upwind projects. Additionally, it has 13,576 MW of contracted and awarded projects, on with 9,175 MW successful the pipeline. The institution aims to standard its operational capableness to 19 GW by FY27, reflecting its ambitious maturation plans.

NTPC Ltd a 'Maharatna' cardinal nationalist assemblage endeavor contributes 24 per cent of India's full powerfulness procreation and has committed to expanding its renewable vigor capableness to 60 GW by 2032. NGEL is poised to play a important relation successful achieving this goal.NGEL's projects are geographically diversified, with operations successful states similar Rajasthan, Gujarat, Tamil Nadu, and Uttar Pradesh.

This wide footprint reduces risks related to location-specific procreation variability.

Additionally, the company's extended acquisition successful renewable task improvement and execution, supported by NTPC's expertise, strengthens its presumption successful the market.

NGEL owns 8,900 acres of freehold onshore and 45,700 acres of leasehold land, ensuring a coagulated instauration for aboriginal projects.The institution enjoys entree to low-cost superior owed to its beardown parentage and operational efficiencies. This is important successful maintaining profitability successful capital-intensive renewable vigor projects.

Moreover, NGEL's absorption connected greenish hydrogen, greenish chemicals, and artillery vigor retention systems aligns with India's sustainability goals, promising important maturation successful the coming years.

At the precocious terms set of Rs108 per share, NGEL is valued astatine FY24 EV/EBITDA of 53.4x. Given the company's robust maturation potential, analysts urge subscribing to the IPO astatine the cut-off terms for semipermanent gains.