NTPC Green Energy IPO off to a roaring start with 33% subscription—will the momentum sustain?

The initial public offering (IPO) of NTPC Green Energy Limited, the renewable energy arm of NTPC Limited, has garnered significant attention as it opened for subscription. The IPO, which launched on November 19, 2024, aims to raise ₹10,000 crore and will remain open until November 22, 2024. On its first day, the offering was subscribed 33%, with retail investors showing notable enthusiasm by bidding for over 1.33 times their allotted quota.

The IPO has a price band of ₹102 to ₹108 per share, with a minimum application size of 138 shares. At the upper limit, this translates to a base investment of ₹14,904. The issue size stands at 59.32 crore shares, of which 19.46 crore shares had been bid for on the opening day. While retail participation has been robust, non-institutional investors (NIIs) have subscribed to only 16% of their quota, and qualified institutional buyers (QIBs) are yet to make significant moves.

In the grey market, NTPC Green Energy’s shares are trading at a premium of ₹1, indicating a slight 0.9% markup over the issue price. This cautious premium highlights tempered investor expectations regarding the IPO’s listing performance. Experts in the industry have pointed out that the muted grey market activity reflects the market’s current volatility and cautious optimism around the renewable energy sector.

Renewables focus aligns with national goals

Proceeds from the IPO will primarily fund NTPC Green Energy’s expansion plans and debt reduction. The company is set to invest heavily in its wholly owned subsidiary, NTPC Renewable Energy Limited, which specialises in solar and wind energy projects. This aligns with India‘s ambitious target of achieving 500 GW of clean energy capacity by 2030.

Market analysts have underscored the strategic importance of NTPC Green Energy’s initiatives, given its role in transitioning NTPC Limited‘s portfolio to a greener energy mix. The company already has an operational capacity of over 3 GW in renewable projects, with plans to scale this significantly over the coming decade. Industry observers believe that NTPC Green Energy’s IPO is not just a financial milestone but also a critical step toward India’s sustainable energy future.

Market reception and investor sentiment

The IPO comes at a time when the Indian stock market has witnessed mixed performances from large-cap IPOs. While investor sentiment remains strong in the renewable energy space, the subdued grey market premium has raised questions about the level of enthusiasm the IPO will sustain. Analysts suggest that the IPO’s performance in the coming days will depend heavily on institutional participation, which often drives demand in the latter half of the subscription period.

An expert from a leading investment firm remarked that NTPC Green Energy’s strong fundamentals and alignment with national energy goals make it an attractive long-term investment. However, the IPO’s success will hinge on broader market conditions and the company’s ability to deliver on its growth promises.

Listing expectations and next steps

The NTPC Green Energy IPO will close on November 22, 2024, and the shares are expected to list on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) on November 27, 2024. Investors will be closely watching the subscription numbers as the IPO progresses, with particular attention to QIB activity, which could significantly influence the final outcome.

Given the company’s strategic focus and the increasing global push toward renewable energy, NTPC Green Energy’s market debut could set a benchmark for future offerings in the sector. Analysts are advising potential investors to carefully assess the company’s financial health and growth prospects before making a decision.