Can NTPC Green Energy IPO power NTPC?
Subscribe to enjoy similar stories. NTPC Ltd’s subsidiary NTPC Green Energy seeks to raise ₹10,000 crore from its proposed public issue of fresh shares. Soon after the announcement, NTPC shares hit a lifetime high of ₹431.85 on Thursday.
Notably, the stock has already surged by 75% over the past year. Nearly 75% of NTPC Green’s public issue is earmarked for debt repayment. Even though the net debt will be ₹7,500 crore after the issue, it is likely to rise thanks to huge capacity expansion plans.
The company plans to have at least 15 GW capacity by FY27 with 85% of it being solar and the remaining wind. This is achievable given that the typical development timeline for the company’s solar and wind projects is about 12-18 months and 18-24 months, respectively. The expanded capacity would be almost five times its existing capacity of 3 GW mainly of solar.
The planned capacity is based on power purchasing agreement (PPA) signed with customers and the letter of award received after auction wins. While the expansion plans indicate strong outlook, it could require huge capital expenditure. So far, it has a gross block of about ₹18,000 crore for 3 GW capacity translating into capex of ₹6 crore per MW.
Even assuming cost reduction per MW to ₹5 crore, it would need capital of about ₹60,000 crore for the additional capacity of 12 GW to complete the expansion. As its capital work-in-progress is already ₹9,000 crore, the additional funding required could be ₹51,000 crore. It is difficult to ascertain what mix of debt and equity will be used for this.
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