Shares of NTPC Green Energy Ltd, the green energy arm of NTPC Limited, have experienced significant volatility following the expiration of their lock-in period on February 24, 2025. This event led to the stock plummeting nearly 9 percent intraday to Rs.96.20, marking its lowest point since listing.
The drop follows the opening of 18.33 crore shares, approximately 2 percent of the company's outstanding equity, to free trading after the three-month lock-in period concluded. With NTPC Limited holding 89 percent ownership of NTPC Green Energy following the IPO, the market braced itself for possible selling pressure from those previously restricted investors.
On the first trading day following the end of the lock-in, NTPC Green Energy shares opened at Rs 102.20 but quickly fell, showing signs of instability. After reaching the low of Rs 96.20, the share price slightly recovered to trade around Rs.97.50 later the same day, reflecting the nervousness among investors amid newfound selling opportunities.
This share price decline isn’t entirely unfounded. Since NTPC Green Energy’s modest market debut on November 27, where it listed at Rs 111.50, the stock has fallen sharply, depreciated by over 25 percent from its initial offering price of Rs 108.
Financial metrics reveal mixed performance for NTPC Green Energy Ltd. For the quarter ending December 2024, the company reported revenue from operations of Rs.505 crore, up 13 percent from Rs.446 crore year-on-year. Notably, net profit rose by 18 percent to Rs.66 crore compared to Rs.56 crore for the same period last year, hinting at growing operational efficiency. If this upward trend continues, it may bolster investor confidence even amid the current turbulence.
Yet, questions remain about the sustainability of its stock price following the current market act. Investors should note the remarkable growth targets set by the company: NTPC Green Energy aims to achieve 60 GW of renewable energy capacity by the fiscal year 2032, soaring from its current 3.5 GW and with over 28 GW presently under development.
These ambitious goals encompass key projects like the green hydrogen hub planned for Pudimadaka, Andhra Pradesh, and the largest renewable initiative spearheaded by any public sector undertaking located at Khavda, Gujarat. These endeavors underlie NTPC’s commitment to enhancing India’s renewable energy framework, which remains urgent amid the nation’s energy needs.
The IPO, which raised significant capital, aimed to prepay loans and bolster general corporate purposes. The interest among investors at the time indicated confidence not just in NTPC Green Energy's potential but also reflected wider market recognition of renewable energy's pivotal future.
While NTPC Green Energy must navigate these turbulent waters post-lock-in expiration, it's important to note the inherent opportunity presented by its renewable projects, which could become increasingly valuable as India pushes toward clean energy goals.
The sharp decline of NTPC Green Energy's shares post-lock-in period raises significant concerns about market reactions to company fundamentals versus speculative pressure. Investors are urged to return to the fundamentals and acknowledge the promising growth opportunities the company may still offer.
Time will tell whether NTPC Green Energy can stabilize and reverse the recent downward trend as they push forward with ambitious projects aimed at securing their position as India’s leading renewable energy provider. Given the nation's increasing focus on green energy and sustainability, adept navigation of the current market challenges will be key.