Didn’t get the Bajaj Housing Finance IPO allotment? Don’t worry! The current IPO market is buzzing with excitement, and there are two significant IPOs set to hit the bourses soon—NTPC Green Energy Ltd, a subsidiary of state-run NTPC, and HDB Financial Services, a subsidiary of HDFC Bank. Owning the shares of the parent entity can improve your chances for allotment of the subsidiary.
NTPC Green Energy Ltd (NGEL)
NTPC Green Energy Ltd has filed its draft red herring prospectus (DRHP) to raise Rs 10,000 crore through an IPO. This share sale will consist entirely of a fresh issue of shares, with no offer-for-sale (OFS) component. Retail investors have much to gain from this offering, particularly those who already hold NTPC Ltd shares. Shareholders of NTPC Ltd are eligible to bid under a special shareholder category, allowing them to invest up to Rs 4 lakh, double the usual Rs 2 lakh limit available to retail investors.
Incorporated in 2022, NTPC Green Energy is a wholly-owned subsidiary of NTPC Ltd, a ‘Maharatna’ public sector enterprise. The company operates renewable energy projects, including solar and wind power assets, across more than six states in India. As of August 31, 2024, NTPC Green Energy had an operational capacity of 3,071 MW from solar projects and 100 MW from wind projects. These projects feed renewable energy into the national grid, supplying power to utilities and other off-takers under long-term Power Purchase Agreements (PPAs) or Letters of Award (LoAs). The company has ambitious growth plans, aiming to add about 60 GW of renewable capacity by 2032, representing roughly 15% of India’s renewable energy capacity.
NTPC Green Energy is also at the forefront of developing Round-the-Clock (RTC) renewable energy projects, which provide consistent energy supply from renewable sources. The company is working on 2.7 GW of RTC capacity, including a massive 1.3 GW RTC project, one of the largest in the world. These efforts place NTPC Green Energy among the top 10 renewable energy companies in India in terms of operational capacity as of June 30, 2024.
NTPC Green Energy’s portfolio as of June 30, 2024, comprised 14,696 MW of solar and wind projects, spread across multiple geographies. The company is diversified in terms of both location and its client base, with 15 off-takers spanning 37 solar projects and nine wind projects. As India’s largest renewable energy public sector enterprise (excluding hydro), NTPC Green Energy is poised to capitalize on the growing demand for clean energy. Its strong credit ratings, coupled with stable and growing revenues, have allowed the company to access low-cost capital for its projects.
With the backing of NTPC Ltd, which has extensive experience in managing large-scale projects and maintaining strong relationships with suppliers and off-takers, NTPC Green Energy is well-positioned for continued growth in the renewable energy sector.
HDB Financial Services (HDBFS)
HDB Financial Services, another eagerly awaited IPO, is expected to raise significant capital soon. Although the company has yet to file its red herring prospectus (RHP), it has established itself as a prominent player in India’s financial services sector. HDBFS is a non-banking financial company (NBFC) that primarily serves the retail and commercial segments, offering a wide range of products such as secured and unsecured loans, asset finance, consumer loans, and loans against property.
HDBFS has experienced steady growth, with its loan book increasing by 17% year-on-year for FY23, reaching Rs 66,000 crore. This growth has been driven by strong demand for personal loans, vehicle loans, and small business financing. The company’s financial performance has been solid, reporting a net profit of Rs 1,740 crore in FY23. HDFC Bank, which holds a majority stake in HDBFS, is seeking a valuation between Rs 78,000 crore and Rs 87,000 crore for the company. The upcoming IPO could see HDFC Bank offloading 10-15% of its stake in HDBFS, raising Rs 7,800-8,700 crore. These funds would boost the bank’s capital adequacy ratio, which stood at 19.3% as of June 2024.
The decision to list HDB Financial Services comes in response to the Reserve Bank of India's mandate requiring NBFCs in the "upper layer" to go public. This IPO follows closely after the successful listing of Bajaj Housing Finance, which saw its market capitalization exceed Rs 1.4 lakh crore.
In summary, while missing out on Bajaj Housing Finance’s IPO might be disappointing, the upcoming NTPC Green Energy and HDB Financial Services IPOs offer promising opportunities for investors looking to capitalize on the current IPO boom. Both companies have strong growth potential, making their initial public offerings highly anticipated in the Indian stock market.
