NTPC gains 4% as bids line up for minority stake sale in Green Energy arm

ArcelorMittal, Brookfield and Canada Pension Plan Investment Board were among over dozen entities that evinced interest to buy stake in green energy arm NTPC Green Energy (NGEL)

Shares NTPC hit a 52-week high of Rs 166.35, up 4 per cent on the BSE in Friday's intra-day trade, after ArcelorMittal, Brookfield and Canada Pension Plan Investment Board emerged among over dozen entities that evinced interest to buy stake in the green energy arm -- NTPC Green Energy (NGEL).

The stock surpassed its previous high of Rs 166.30 that it had touched on April 19, 2022. At 09:42 am, it traded 2 per cent higher at Rs 163.55, as compared to an unchanged S&P BSE Sensex at 58,768 points. In the past six months, NTPC has outperformed the market by gaining 25 per cent, as against 6 per cent rise in the benchmark index. The stock has surged 41 per cent in a year, as compared to 1.4 per cent rise in the S&P BSE Sensex.

The expression of interest (EoI) for stake sale of 5 to 10 per cent in NGEL was invited in June this year. The thermal power behemoth aims to sell minority stake, to raise up to Rs 2,000 crore.

The stake sale of NGEL is part of the asset monetisation target of NTPC, which is pegged at Rs 15,000 crore, for three years. Along with the listing of NGEL, NTPC is also looking to pare its stake in two companies - NTPC Vidyut Vyapar Nigam ltd (NVVN), the power trading arm and North Eastern Electric Power Corporation ltd (NEEPCO). NTPC acquired 100 per cent stake in NEEPCO in March 2020, which was earlier owned by the Union Government of India to contribute to the divestment target of the Centre, Business Standard reported. CLICK HERE FOR MORE

In line with the company's vision to reach 60 gigawatt (GW) of renewable capacity by 2032, the capital raise will help NTPC to get growth capital and pursue their capacity expansion plans.

"Currently, the company has 2,500 megawatt (MW) of operational RE assets with 4,500 MW under construction. On the whole, the diversification into green energy value chain and monetisation of the same via stake sale to strategic investors will also help in the ESG matrix, which eventually can re-rate the stock in the medium term," brokerage firm ICICI Securities said.

The company continues to pursue its long-term plan with a target to achieve total installed capacity of 130 GW by 2032.

"The focus is on RE capacity addition with a roadmap of adding 60 GW by 2032. The purpose is to hive off the identified Renewable Energy Assets of NTPC along with NTPC Renewables Energy (NREL) to NGEL and carry out monetization of NGEL through IPO or strategic investment route," NTPC had said in its FY22 annual report.

Moreover, the company envisions to enhance its current presence in consultancy services, power trading, and ancillary services. The company has targeted 25 per cent market share in ancillary services and storage by 2032 under its long-term plan. It also plans to make foray into the Hydrogen Economy and production of Green Chemicals (Methanol & Ammonia)supported by research & development and collaboration with OEM/OES, research institutes, etc.