This year, the IPO market was hot, with many big companies making investors lucrative listings. But the trend continues, with many companies lining up for IPOs. Now another big company has filed documents with market regulator and will be listed after SEBI’s approval. We are talking about NTPC Green Energy, a subsidiary of NTPC, which could have an IPO size of Rs 10,000 crore. The share price of its parent company NTPC Limited has tripled its investors’ money in the past five years.
An IPO issues only new shares
NTPC Green Energy, a subsidiary of government company NTPC Limited, is all set to launch an IPO to raise Rs 10,000 crore from the market, for which the company has filed a draft red herring prospectus (DRHP) with SEBI. If we look at the information provided in it, the NTPC unit will only issue new shares and the existing shareholders will not sell their shares.
Investors may get a good response
India’s focus is on the green energy sector, with the government looking to increase renewable energy capacity from 200 GW to 500 GW by 2030. Companies in this sector are also growing at a high rate. Throughout history so far, issues with companies in the green energy sector have received strong responses from investors. In such a situation, NTPC Green Energy’s IPO is also expected to usher in a good entry opportunity. However, the company is ready to enter the market and is just waiting for SEBI’s approval.
Where will the company spend the money?
NTPC Green Energy, in its filing with SEBI, has put forward a target of raising Rs 10,000 crore from the market. Apart from this, it has also been told where the money will be used. NTPC said that most of the funds raised from the IPO will be used to repay about half of the company’s Rs 7,500 crore debt of Rs 15,277 crore. Kranti Bathini, director of equity strategy at Wealthmills Securities, expects that the IPO is likely to attract strong interest from investors. Especially since the country is mainly focusing on green energy in the future.
NTPC Green is a wholly owned subsidiary of NTPC. It is currently the largest green energy company in the PSU space in terms of operational capacity and energy production. 75% of the issue will be for QIBs, 15% for NIIs and 10% for retail investors. Talking about the bankers, IDBI Capital Markets, HDFC Bank, IIFL Securities and Nuvama Wealth Management are on the list.
Earned more than three times in five years
Investors who invested in the shares of this government company have received good returns in the last five years. The stock price has increased from Rs 119.85 to Rs 423. If an investor had invested in this stock on November 20, 2019, his return so far would have been 252%. This means that an investor who invested Rs 1 lakh on that day would have made Rs 3.52 lakh so far.
There may be an impact on the stock price tomorrow
The Indian IPO market has grown this year, with around 235 companies entering the stock market through IPOs so far. The funds raised by companies through these offerings have exceeded Rs 71,000 crore. On the other hand, the Nifty-50 index has hit more than 50 all-time highs so far in 2024.
It was only after the news of its preparation to enter the IPO market and take a step forward to submit documents to SEBI that the impact on the stock was felt, with the stock surging more than 3% on Thursday. If we talk about the last five trading days, the stock price has increased by 4.24%. In this case, the bullish trend in the stock market is still continuing, while the impact on NTPC stock is also visible.
(Note- Always take advice from market experts before making any investment in the stock market or IPO market.)
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