The NTPC Green Energy IPO has caught significant attention in the market, with investors debating its potential as a profitable investment. As the second day after its listing unfolds, the stock shows notable activity. Let’s dive into its performance, expert opinions, and fundamental analysis to understand if this stock is worth holding for the long term.
Performance Analysis of NTPC Green Energy Stock
Market Movement and Trends
On the second day of trading, NTPC Green Energy stock witnessed volatility. The stock initially opened on a negative note, dropping to an intraday low of ₹116. However, strong buying interest at lower levels pushed it to an intraday high of ₹127, eventually stabilizing around ₹125. This represents a recovery of nearly 9% from its low point.
The trading volume has been remarkable. By noon, 11 crore shares had been traded, placing NTPC Green Energy among the most actively traded stocks in the market. This reflects robust investor interest despite the initial dip.
Key Developments Boosting the Stock
One significant driver for the stock’s recovery is a positive business update. NTPC Green Energy has announced the commercial commencement of its Shajapur Solar Project, a 105 MW solar power unit in Madhya Pradesh. Out of this, 55 MW is now operational as of November 29, 2024. This milestone reinforces NTPC Green Energy’s commitment to expanding its renewable energy portfolio and contributes to investor optimism about its growth potential.
Is NTPC Green Energy Stock Overvalued?
A critical question for investors is whether NTPC Green Energy is overpriced compared to its peers. Here’s a comparison of its valuation metrics:
| Company | Stock Price (₹) | P/E Ratio |
|---|---|---|
| NTPC Green Energy | 125 | 305 |
| NTPC (Parent) | 364 | 15 |
| Power Grid | 334 | 19.67 |
| Adani Power | 565 | 17.1 |
| Tata Power | 216 | 35.06 |
| Adani Green | 1088 | 133 |
| JSW Energy | 670 | 60 |
With a P/E ratio of 305, NTPC Green Energy is significantly more expensive than its peers, including its parent company, NTPC, and other industry leaders like Adani Power and Power Grid Corporation. This raises concerns about its current valuation, even though its growth potential remains promising.
Fundamentals and Financial Performance
Revenue and Profit Growth
The company’s financial results for 2024 indicate robust growth:
- Revenue increased from ₹171 crore in 2023 to ₹208 crore in 2024.
- Net Profit surged from ₹171 crore in 2023 to ₹345 crore in 2024, reflecting a strong upward trajectory.
Balance Sheet Highlights
- Market Capitalization: ₹10,892 crore
- Debt-to-Equity Ratio: 2.20, indicating a moderate level of debt.
- Book Value: ₹21.3 per share.
While the company demonstrates strong financials, its high P/E ratio suggests that investors are paying a premium for its future growth potential.
Expert Opinions: Buy, Hold, or Sell?
Market experts and brokerage houses have mixed opinions about NTPC Green Energy stock:
- Positive Outlook for Long-Term Investors
- Gaurang Shah, Head of Geojit Financial Services, emphasizes India’s growing energy demand and government support for renewable energy. He recommends holding NTPC Green Energy stock for the long term, as it could become a multibagger in the future.
- Caution from Kotak Securities
- Kotak Securities has assigned a “sell” rating, citing the stock’s rich valuation. They believe NTPC Green Energy may not fully support its parent company’s operational targets.
Future Prospects of NTPC Green Energy
Renewable Energy Expansion
NTPC Green Energy aims to scale its operational capacity from the current 3.3 GW to 26 GW in the near future, with an ultimate goal of reaching 60 GW. This ambitious expansion plan positions the company as a key player in India’s renewable energy sector.
Government Support
The Indian government’s push for clean energy and favorable policies adds a layer of confidence for long-term growth. Renewable energy remains a critical focus to meet India’s increasing energy needs.
Should You Invest in NTPC Green Energy?
NTPC Green Energy presents a compelling case for long-term investment due to its strong financial growth, ambitious expansion plans, and strategic alignment with India’s renewable energy goals. However, its high valuation compared to peers and potential short-term volatility warrant caution.
Investor Tip: Conduct thorough research or consult a financial advisor before making investment decisions. For those with a long-term horizon, NTPC Green Energy could offer substantial returns in the coming years.