Gurdeep Singh, Chairman, and Jaikumar Srinivasan, Director Finance, NTPC Green, discuss their upcoming IPO with ET NOW. NTPC Green Energy, NTPC’s green energy arm, has set the price range for its upcoming Rs 10,000-crore initial public offering (IPO). The price band has been fixed between Rs 102 and Rs 108 per share, and the IPO is scheduled to open on November 19 and close on November 22. This IPO ranks as the third largest of the year, following Hyundai Motor India’s Rs 27,870-crore issue and Swiggy’s Rs 11,300-crore offering.
What would be the usage of the IPO proceeds once the IPO floats through? How do you plan on mobilising and deploying these funds?
Gurdeep Singh: The IPO proceeds will be used for the capex requirement for ongoing and forthcoming projects. This is a dilution and new share issuance and there is no selling of shares at this stage. We have gone for raising Rs 10,000 crore via an initial public offer (IPO).
Are you worried about how the Street is going to be responding to this IPO given the mood of the market? Recent listings have not done exceedingly well on the Street. Are you worried about how the Street is going to respond?
Jaikumar Srinivasan: No, we are not at all worried. We have kept a price which is appropriate and it also reflects our growth potential. It is a well thought out strategy for pricing the IPO.
Gurdeep Singh: We had decided on the pricing band after a complete due diligence and thorough discussions with various investors and their responses about what is coming out. It is a very fair value and the initial investors should benefit in the long run.
The company has registered a revenue CAGR of 46.8%. You have the operating EBITDA CAGR at 48. Your PAT CAGR is also at 90.75% over the course of FY22 to FY24. Are you confident of these numbers sustaining going ahead?
Jaikumar Srinivasan: The same trend will continue. In fact, this business will have an operating EBITDA margin of anything above 87% to 90%. We will continue to sustain this and we will also ensure that our business modelling is such that we will improve both the performance as well as the bottom line.
Help me understand where the nuclear, hydrogen and ammonia capacities lie? Will it be with NTPC or with the renewables arm and what portion will they form of the overall capacity by then?
Gurdeep Singh: As of now, hydro and nuclear is not the part of NTPC Green Energy. The NTPC Green Energy is on the four pillars and those are solar, wind, storage, whether it is battery, whether it is PSP and we are also working on the thermal storage and the carbon dioxide based storage system. Let us see how fast we can work on that and going forward, there will be green molecule which will be coming into this which may include green methanol, green ethanol, DME, sustainable aviation fuel and green ammonia and so on. So, those things will be housed in the NTPC Green Energy itself. Let me share here that we are working on our hydrogen hub in Andhra Pradesh which is a place called Pudimadaka that is near Vizag and we already have a land of around 1,200-acre which is a coastal location and this is being developed as a hydrogen hub. Apart from nuclear and hydro , all non-fossil will be coming towards NGEL.The competitive intensity in the sector that you operate in is increasing. How are you going to ensure prudent bidding going ahead for all the future projects and what is the outlook on that front?
Gurdeep Singh: See, we had been very conscious. We are a public sector utility and our actions and our decisions are based on very thorough analysis and we document each and everything. So, we will never be kind of just putting some bid which is just for the sake of grabbing the project but at the same time we do not expect that we will be trying to have something very-very high bids and which is going to really pinch the consumers.
We always have very sensible and healthy returns. We are maximising the returns but at the same time, we see that the project remains viable throughout and it is well received by the offtaker.