NTPC Green Energy extends gain for third straight day; stock rallies over 9%; here’s why

Shares of newly-listed NTPC Green Energy Ltd soared over 9% in trade on Wednesday, December 4, after hitting the 10% upper circuit in the previous session.

On the National Stock Exchange of India (NSE), the NTPC Green Energy stock touched its record high of ₹155.35 on Wednesday, which was almost 44% higher than its initial public offering (IPO) price of ₹108 per share.

The renewable energy stock listed on exchanges on November 27 at ₹111.5 apiece, which is a premium of just 3.2% over the issue price.

The investors, who were allotted at least a single lot of 138 shares in the NTPC Green Energy IPO, would have made a profit of ₹6,534 at today’s intraday high price over the minimum investment of ₹14,904.

Key triggers behind stock rally

The rally in the stock post-listing has been seen amid a positive sentiment among investors. Market observers see a potential rise in stock price due to the company’s strong fundamentals and strong position within the green energy sector.

According to a CRISIL report, NTPC Limited's renewable energy arm is the largest renewable energy PSU in terms of operating capacity as of September 30, 2024. The company’s renewable energy portfolio includes solar and wind power projects spread across multiple states.

Green energy stocks are also in focus ahead of the Reserve Bank of India’s Monetary Policy Committee meeting, which is scheduled from December 4 to December 6. According to experts, the RBI and other regulators are likely to issue guidelines on green lending. The government framework on green lending is likely to incentivise solar investments, experts predict.

The NTPC Green Energy IPO opened for subscription on November 19 and closed on November 22. It aims to raise ₹10,000 crore through a fresh issuance of shares.

The purpose of the issue was to raise money for NTPC Green Energy’s wholly-owned subsidiary, NTPC Renewable Energy Ltd (NREL), for repayment/prepayment of certain outstanding borrowings availed by the unit.

Despite creating a lot of buzz in the market, the NTPC Green Energy IPO was oversubscribed by just around 2.55 times, with the non-institutional investors (NIIs) category remaining undersubscribed at 85%.

Muted demand by NIIs showed its effect on the stock in the form of a tepid listing a few days later. However, the share price has increased after the listing amid upbeat investor/trader sentiments.

NTPC Green Energy, a ‘Maharatna’ central public sector enterprise, is an umbrella company for the green business initiatives of state-run NTPC Ltd and undertakes projects through organic and inorganic routes. It aims to be the flag-bearer of NTPC’s green energy journey to achieve the ambitious target of 60 GW by 2031-32. The company posted a revenue of ₹2,037.66 crore in 2023-24, while profit after tax stood at ₹344.72 crore.