The Largest Upcoming PSU IPOs in India

Public Sector Undertakings (PSUs) are experiencing a remarkable renaissance in the Indian stock market. The once-dormant sector has soared to new heights, with a staggering near-100% surge in just a single year.

The recent performance of the multibagger bull run in PSU stocks was linked to the BJP's performance in the Lok Sabha elections and was also segmented as Modi stocks.

Further, government initiatives in infrastructure, capital expenditure, and improved governance spurred this resurgence.

This impressive growth stands in stark contrast to the broader market, where the Sensex has managed a respectable 50% increase during the same period.

Even more remarkably, not a single PSU has delivered negative returns to investors since June 2022.

While PSU stocks may appear pricey for investors, exciting developments are on the horizon.

For investors seeking entry points, several PSUs are gearing up for IPOs.

#1 NTPC Green Energy

Leading the list is NTPC Green Energy.

The PSU, NTPC is preparing to launch the IPO of its green energy arm, NTPC Green Energy. NTPC Green Energy is a wholly-owned subsidiary of NTPC Limited, India's largest power company.

This subsidiary focuses on accelerating NTPC's renewable energy growth and expanding its green footprint across India and potentially overseas.

NTPC Green Energy Ltd (NGEL) recently selected investment bankers for the listing.

NTPC Green Energy plans to construct a 60-GW renewable portfolio over the next decade. It plans to develop its non-fossil companies using share sale earnings. The corporation supports the government's 2070 net zero carbon emission goal.

It is also looking to develop pumped hydro storage and green hydrogen and ammonia manufacturing projects. The company is also working on e-mobility and waste-to-wealth projects.

The primary objective of the Green Energy IPO is to raise funds for NTPC's renewable energy initiatives. The capital generated through the IPO will be channelled into solar, wind, and other clean energy projects, enabling NTPC to diversify its energy portfolio and contribute to India's renewable energy targets.

Petronas had offered to buy the stake at around Rs 40 billion (bn) for NGEL, pipping two other companies for the stake.

This will be the second listing in two years of a government-owned company in the renewable energy sector. Last November, the Indian Renewable Energy Development Agency saw its IPO oversubscribed 38.8 times.

Further, a joint venture deal between NTPC Green Energy and Indian Oil Corporation was struck last in February 2024 to establish renewable energy projects that would fulfil the IOCL Refineries' continuous power needs.

Through the JV, NTPC and IOC would be able to fulfil their respective clean energy objectives in their core industries. The cabinet committee on economic affairs permitted NTPC to spend more in its green energy business, NTPC Green Energy, than was allowed in March.

#2 SJVN Green Energy

Next on the list is SJVN Green Energy.

SJVN, Mini Ratna public sector enterprise under the administrative control of the Ministry of Power, Government of India is gearing up to launch the IPO of its wholly owned subsidiary SJVN Green Energy.

The company focuses on power generation from renewable sources such as solar parks, wind and hybrid projects, battery energy storage systems, and ventures in wave, biomass, small hydro, and green hydrogen-based businesses.

In April 2024, SJVN incorporated a joint venture with Assam Power Distribution Company named SGEL Assam Renewable Energy Limited, as issued by the Ministry of Corporate Affairs, Government of India.

This joint venture will engage in power generation from all renewable energy sources, including hydropower, by setting up power plants.

In March, SJVN received a 200 MW solar project through an e-Reverse Auction conducted by Gujarat Urja Vikas Nigam.

The estimated cost of construction and development is Rs 11 billion (bn). Additionally, SJVN received a letter of intent for a 500 MW solar project at Gujarat Industries Power Company Park in Khavda, with an investment of Rs 27 bn.

SJVN Green Energy currently has 3.6 GW of assets in its pipeline, set to be commissioned in the next two years.

While no official announcements have been made by the renewable energy major regarding an IPO, with plans to invest around Rs 15 bn in renewable capacity addition, the company may consider going public soon.

#3 IIFCL

Next on the list is the Indian Infrastructure Finance Company Ltd (IIFCL).

This state-owned enterprise plans to go public in the next financial year and will soon initiate the consultation process.

Currently, IIFCL is 100% owned by the Government of India.

IIFCL has consistently met its targets in terms of revenue and profitability, demonstrating strong performance over the last four years.

This performance reflects the significant growth potential of India's infrastructure sector. The company has approved projects worth Rs 2.5 trillion (tn) and has disbursed Rs 1.2 tn, with approximately 40% of its total business conducted in the last four years.

Looking ahead, IIFCL aims to sponsor Alternative Investment Funds (AIFs) and issue green sustainability bonds.

The company also emphasizes the need to strengthen the fundamentals of greenfield projects to attract both domestic and foreign investors.

#4 NLC India Green Energy

Next on the list is NLC India Green Energy.

NLC India, a Navaratna Central Public Sector Enterprise (CPSE) under the Ministry of Coal is preparing to list its wholly-owned subsidiary, NLC India Green Energy Limited (NIGEL).

NIGEL will handle the planning and participation in upcoming renewable energy tenders, as well as the tendering, execution, and commissioning of renewable energy projects.

The subsidiary aims to achieve a capacity of 5 GW by 2030, significantly contributing to carbon emission reduction.

NIGEL has signed a Power Purchase Agreement (PPA) with Gujarat Urja Vikas Nigam Limited (GUVNL) for the proposed 600 MW Solar Power Project at Khavda Solar Park, Gujarat.

This project is expected to offset approximately 35.5 m metric tonnes of carbon dioxide emissions over its lifetime. The 600 MW solar power project at Khavda Solar Park will be the largest solar project developed by NLCIL to date.

NIGEL has set an ambitious target to institute renewable energy projects totalling 6 GW by 2030. Currently, projects aggregating 2 GW are under development across various regions in India. While the company has not made any official announcements regarding an IPO, it could be on the horizon.

#5 ONGC Green

Next on the list is ONGC Green.

Oil and Natural Gas Corporation (ONGC), the largest crude oil and natural gas company in India, incorporated a wholly owned subsidiary, ONGC Green, on 27 February 2024.

ONGC Green engages in the value-chains of energy business viz. renewable energy, bio-fuels/ bio-gas business, green hydrogen and its derivatives like green ammonia, green methanol, storage, carbon capture, utilisation and storage, and the LNG business.

The company in March approved a Rs 990 m equity investment in its newly created wholly-owned subsidiary ONGC Green.

Its board has given in-principle approval to invest an additional Rs 11 bn in ONGC Green.

It also plans to expand beyond India by exploring opportunities in international renewable energy markets.

ONGC Green might leverage ONGC's existing infrastructure and expertise for efficient project development and management in the renewable energy sector.

These all make ONGC Green a game changer IPO for the Indian market.

While there have been no official announcements regarding an IPO, the company may consider such plans soon.

#6 Bharat Coking Coal & Central Mine Planning and Design Institute

Next on the list is Bharat Coking Coal & Central Mine Planning and Design Institute.

Coal India is gearing up to launch the initial public offer (IPO) for its subsidiaries Bharat Coking Coal (BCCL) and the Central Mine Planning and Design Institute (CMPDI) in the FY25, according to media reports.

BCCL produces the bulk of coking coal mined in the country meeting 50% of the total requirement of this key input for the steel industry.

CMPDI, headquartered in Ranchi, is Coal India's consultancy firm that provides research and support for mineral exploration, mining and infrastructure engineering, among others.

The company has identified the banks and is in the process of listing BCCL, which will be followed by the listing of CMPDI.

Both BCCL and CMPDI are profit-making subsidiaries of Coal India.

While the company had previously announced plans for the divestment of 25% of the paid-up share capital of BCCL and its subsequent listing on the stock exchanges back in 2022, the actual listing has been pending.

The process is currently underway and is expected to materialise by the next financial year.

However, no specific details of the IPO have been publicly disclosed.

#7 NHPC Renewable Energy

Next on the list is NHPC Renewable Energy.

NHPC, an Indian public sector hydropower company is speculated to list its subsidiary NHPC Renewable Energy soon.

NHPC Renewable Energy. This subsidiary focuses on developing and managing renewable energy projects in India, primarily in solar and wind power. NHPC Renewable Energy is committed to expanding its renewable energy portfolio, with a pipeline of over 1,300 MW of solar projects.

NHPC recently announced plans to increase investments in renewable energy sources, aiming to allocate 80% of its total capital expenditure to the hydro sector and 15-20% to solar and hybrid green energy sectors by the end of FY27.

This strategy is set to enhance the growth prospects of its subsidiary. According to Rajendra Prasad Goyal, NHPC's director, the company plans to either take its clean energy subsidiary public or divest its stake to strategic investors via private placement within the next two to three years.

Although no specific details of the IPO have been publicly disclosed, NHPC has clear plans to increase its renewable energy capacity in the future.

#8 Canara Robeco Asset Management

Last on the list is Canara Robeco Asset Management.

Canara Bank on 27 December said it is going to list its mutual fund subsidiary, Canara Robeco Asset Management. The lender did not comment on the timeline for the same.

Canara Bank has obtained 'in-principle' approval to list its mutual fund subsidiary, Canara Robeco Asset Management Co., through an initial public offering (IPO). This step is taken to bring the mutual fund subsidiary to the stock exchanges.

Incorporated in 1993, Canara Robeco MF was earlier known as Canbank Mutual Fund. In 2007, Canara Bank partnered with the Robeco Group through a joint venture and the mutual fund was renamed Canara Robeco Mutual Fund.

If Canara Robeco AMC gets listed, it will be the fifth listed asset management company in India.

Currently, Aditya Birla Sun Life AMC, HDFC Asset Management, Nippon Life India Asset Management, and UTI Asset Management are the four listed mutual funds in India.

Canara Bank plans to sell off 13% equity shares in Canara Robeco Asset Management Company (CRAMC) by taking the mutual fund subsidiary public.

The public sector lender in a filing to exchanges said it has approved to kick off the process for diluting a 13% stake through an initial public offering (IPO).

The proposed IPO, however, remains subject to approval from the government and the RBI.

Conclusion

Investing in PSU (Public Sector Undertaking) company IPOs can be a compelling opportunity for several reasons.

First, these companies often benefit from stable government backing, which provides a level of assurance regarding governance and operational support. This stability can appeal to risk-averse investors seeking reliability in their investments.

Additionally, IPOs of PSU companies sometimes offer attractive valuations compared to their private sector counterparts, making them potentially undervalued opportunities in the market.

Moreover, many PSU companies have a history of distributing dividends, offering attractive dividend yields to investors. This regular income stream can be particularly appealing for income-focused investors looking for steady returns.

Furthermore, PSU sectors often align with government priorities such as infrastructure development and sectoral growth initiatives.

Investing in these IPOs allows investors to participate in the growth potential of sectors crucial to the country's economic development, such as energy, finance, and infrastructure.

Another advantage is the established market presence and legacy of PSU companies, which often come with a strong customer base and recognised brand. This can translate into stable operations and potentially lower business risks.

However, as with any investment, thorough research and analysis are essential to evaluate the specific opportunities and risks associated with each IPO.

Nevertheless, it is always prudent to conduct thorough research before making any investment decisions. Ensure that the investment aligns with your financial objectives and matches your risk tolerance level.

For more information on IPOs, check out the list of upcoming IPOs.

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