NTPC Green Energy IPO likely to open in 1st week of November; check key risk factors 

Last week, NTPC Green Energy filed preliminary papers with capital markets regulator Sebi to raise ₹10,000 crore through an IPO. The company has planned roadshows in India (Mumbai) as well as abroad, especially in Singapore, as per the report.

The initial share sale is entirely a fresh issuance of equity shares with no offer-for-sale (OFS) component, according to the draft red herring prospectus (DRHP).

The company said proceeds of the issue to the tune of ₹7,500 crore will be used to repay or prepay part or all of its subsidiary NTPC Renewable Energy Ltd's (NREL) outstanding loans, while a portion will be utilised for general corporate purposes.

The filing comes at a time when the country's IPO market is thriving, with around 60 main board companies having launched their initial share sale this year so far.

• NTPC Green Energy, in its DRHP, says there is a concentrated pool of utilities and power purchasers for electricity generated by its plants and projects.

"Accordingly, we derived a significant portion (more than 87%) of our revenue from operations  from our top five offtakers in fiscal 2024, with our single largest offtaker contributing around 50% of our revenue from operations in fiscal 2024. Loss of any of these customers or a deterioration of their financial condition could adversely affect our business, results of operations, and financial condition," it said. 

• The company's business and profitability are substantially dependent on the availability and cost of solar modules, solar cells, wind turbine generators, and other materials, components, and equipment for our solar, wind, and other projects.

"We are dependent on third party suppliers for meeting our materials, component, and equipment requirements. Any disruption to the timely and adequate supply or volatility in the prices of required materials, components, and equipment may adversely impact our business, results of operations, and financial condition," the DRHP adds. 

• NTPC Green Energy's renewable energy project construction activities may be subject to cost overruns or delays that may adversely affect its business, results of operations, financial condition, and cash flows. Further, its future growth is significantly dependent on successfully executing its contracted and awarded projects. In the event the company is not successful in executing its contracted and awarded projects, its business, results of operations, and financial condition may be adversely impacted. 

• "Our operating renewable energy projects are concentrated in Rajasthan. Any significant social, political, economic, or seasonal disruption, natural calamities, or civil disruptions in Rajasthan could have an adverse effect on our business, results of operations, and financial condition," the DRHP mentions. 

• The company says that it may face risks and uncertainties when developing its renewable energy projects, which may result in delays in commissioning, which could materially and adversely impact its business, results of operations, financial condition, and cash flows.

NTPC Green Energy is a 'Maharatna' central public sector enterprise with a renewable energy portfolio, including solar and wind power assets spread across more than six states.

As of August 2024, the company's operational capacity comprised 3,071 MW from solar projects and 100 MW from wind projects.

Overall, the NTPC group aims to reach 60 GW of renewable energy capacity by 2032. Currently, it has 3.5 GW of installed capacity, and over 28 GW is in progress.

India's renewable energy sector is growing rapidly. Globally, India is ranked fourth in clean energy capacity, including wind and solar installations, the draft paper said, citing a Crisil report.

The country's installed renewable energy capacity increased from 63 GW in FY12 to 123 GW in FY21 and reached about 191 GW by March 2024 (including large hydro). As of March 2024, renewable energy made up nearly 43% of India's total power generation capacity, with solar energy leading this growth, it added.

IDBI Capital Markets & Securities, HDFC Bank, IIFL Securities, and Nuvama Wealth Management are the book-running lead managers to the issue.