NTPC Green IPO: Does applying in shareholder quota boost allotment chance?

NTPC Green Energy has reserved 10 per cent of its IPO specifically for existing NTPC shareholders, sparking interest in whether applying through this shareholder quota might improve allotment chances

NTPC Green IPO: Dalal Street investors are eagerly awaiting the initial public offering (IPO) of NTPC’s renewable energy arm, NTPC Green Energy, which is set to open for public subscription on Tuesday, November 19, 2024. 

 

Notably, NTPC Green Energy has reserved 10 per cent of its Rs 10,000 crore IPO specifically for existing NTPC shareholders, sparking interest in whether applying through this shareholder quota might improve allotment chances for investors.

 

But, does applying for an IPO via the shareholder quota improve allotment prospects?

 

Ambareesh Baliga, a market expert is not fully convinced. Though the chances of allotment to existing shareholders improve, an application via this route does not guarantee allotment.

 

 

In recent months, investors have started buying NTPC shares even in minimal quantities of just two or three to qualify for the shareholder quota, a trend not seen previously said Baliga. This could influence allotment odds in the reserved portion. However, the main advantage for NTPC shareholders, Baliga added, "is the flexibility to apply in both the shareholder and general categories, potentially boosting their chances."

 

Echoing a similar view, Astha Jain, senior research analyst at Hem Securities, said that while applying under the shareholders' category increases the chances of getting an allotment, it does not guarantee one. 

 

As seen in the cases of Bajaj Housing Finance and Tata Technologies, although the chances are higher, "the allotment of shares under the shareholders' quota in an IPO also gets influenced by the number of applications received under the reserved category," Jain explained.

 

NTPC Green Energy, however, has said in the Red Herring Prospectus that allotment in the quota reserved for shareholders will be “proportionate and, in case of oversubscription, subject to minimum bid lot.”  Meanwhile, NTPC shares were trading at Rs 372.90 apiece, down 2.09 per cent from their previous close, at around 2:34 PM on Thursday on the BSE.

 

NTPC Green Energy IPO details

The NTPC Green Energy IPO, open for public subscription from Tuesday, November 19, 2024, to Friday, November 22, 2024, comprises a fresh issue of 925,925,926 shares. The company has set the price band at Rs 102–108 per share, with a lot size of 138 shares. Accordingly, investors can bid for a minimum of 138 shares and in multiples thereof. A retail investor would need a minimum of one lot of 138 shares, requiring at least Rs 14,904.

 

Meanwhile, unlisted shares of NTPC Green Energy were quoted at a premium of Rs 3 over the upper end of the IPO price, resulting in a grey market premium (GMP) of nearly 2.78 percent, according to sources tracking grey market activity.

 

KFin Technologies is the registrar for the NTPC Green Energy IPO, while IDBI Capital Market Services, HDFC Bank, IIFL Securities, and Nuvama Wealth Management are the book-running lead managers.

 

The finalisation of the basis of allotment with the designated stock exchange is expected on or around Monday, November 25, 2024, and credit of equity shares to demat accounts of allottees is scheduled for on or about Tuesday, November 26, 2024.

 

Shares of NTPC Green Energy are likely to make their market debut on or around Wednesday, November 27, 2024.

 

NTPC Green Energy intends to utilise the net proceeds toward funding investments in its wholly-owned subsidiary, NTPC Renewable Energy (NREL), for the repayment or prepayment, in full or in part, of certain outstanding borrowings by NREL, as well as for general corporate purposes.  About NTPC Green Energy

NTPC Green Energy, a wholly-owned subsidiary of 'Maharatna' NTPC, is India's largest non-hydro renewable energy public sector enterprise. As of September 30, 2024, it boasts an operational capacity of 3,320 MW, comprising 3,220 MW of solar and 100 MW of wind projects across six states. NTPC Green Energy generates revenue by selling solar and wind power to Indian government agencies and public utilities through Power Purchase Agreements.