Shares of NTPC Ltd. traded with gains of half a percent during the morning deals on November 22, the final day of its subsidiary NTPC Green Energy's IPO (initial public offering).

The shares of NTPC have fallen a little over 16 percent over the last one month. Experts, however, expect correction to continue in the next few months based on market movements.

Siddharth Khemka, Head of Research (Retail) at Motilal Oswal Financial Services Limited (MOFSL), said that the market sentiment may have been impacted by external factors including the US election results and below expectations Q2 results from NTPC.

According to Rupesh Sankhe, Senior Research Analyst at Elara Capital, the listing of NTPC Green Energy as a separate entity will likely lead to a holding company discount.

“That’s why the incremental value on the NTPC Green side will result in a discount for NTPC’s current shareholders. So, in SOTP (Sum of the Parts), you will see some value coming down,” said Sankhe, adding that this has already been factored in by the market.

But he remains optimistic about the long-term prospects, citing that NTPC's conventional assets are currently valued at around 2X book value, which he believes is very reasonable.

“A lot of renewable energy capacities are being added, giving investors options on the renewable side. NTPC holds about 90 percent of NTPC Green. But if you take out this value in SOTP, the conventional assets of NTPC are now available at an attractive valuation,” he added.

At 10 am, shares of NTPC were quoting Rs 358.95 apiece, higher by 0.8 percent on the NSE compared to the previous session's closing price.

NTPC Green Energy initial public offering was subscribed 93 per cent on the second day of the share sale, with investors bidding for 54.96 crore shares against 59.31 crore on offer. The Rs 10,000-crore IPO is entirely a fresh issue of equity shares with no offer-for-sale (OFS) component. The price band for the issue is set at Rs 102-108 per share.

Proceeds from the IPO will primarily be used to repay or prepay a portion of the outstanding loans of its subsidiary, NTPC Renewable Energy Ltd. (NREL), amounting to Rs 7,500 crore. The remaining funds will be utilised for general corporate purposes.

Published on November 22, 2024 / 10:09 IST

Vikasdhan - Grow your Dhan with Vikasdhan

Disclaimer- not an investment advice, only for educational purpose. To read complete disclaimer, click on the link https://www.vikasdhan.com/disclaimer