NTPC Green Energy's IPO: A Green Leap for Investors

NTPC Green Energy Ltd's IPO is opening on November 19, offering promising long-term gains despite supply chain risks. The company, backed by NTPC, aims to boost its renewable capacity significantly. Investors are advised to consider potential regional risks and dependencies on limited power purchasers before subscribing.

The Initial Public Offering (IPO) of NTPC Green Energy Ltd (NGEL) is set to open on November 19, with analysts recommending subscription at the cut-off price for long-term benefits, according to a report by SBI Securities. NGEL is seen as having robust growth potential.

However, the report highlights reliance on imported solar panels and components without securing long-term contracts, posing vulnerability to supply chain disruptions. The timely execution of projects remains a significant challenge, potentially impacting financial performance. The company's heavy reliance on certain power purchasers, who account for over 97 percent of recent revenue, is another concern.

As of September 2024, NGEL boasted an operating capacity of 3,220 MW of solar and 100 MW of wind power, with ambitious plans to reach 19 GW by FY27. Its parent, NTPC Ltd, aims to increase its renewable energy capacity to 60 GW by 2032, offering a promising outlook. With projects across states such as Rajasthan and Gujarat, NGEL reduces location-specific risks.

Additionally, NGEL's focus on green hydrogen, chemicals, and battery storage aligns with India's sustainability goals. The company benefits from NTPC's expertise and access to low-cost capital, positioning it well in the renewable sector despite risks associated with operational and regional concentrations.

(With inputs from agencies.)