NTPC Green Share Price Drop Over 6% as Shareholder Lock-In Ends

The stock market witnessed a significant dip in NTPC Green share price as the three-month shareholder lock-in period came to an end. The company, a key player in the renewable energy sector, saw its shares slide more than 6% in early trading on February 24. But what does this mean for investors? Let’s break it down.

Why Are NTPC Green Shares Falling?

According to Nuvama Alternative & Quantitative Research, approximately 18.33 crore shares, accounting for 2% of NTPC Green Energy’s total equity, have now become eligible for trading. However, this doesn’t necessarily mean all these shares will flood the market—just that investors now have the option to sell.

Despite this drop, NTPC remains the dominant shareholder, holding 89% stake in NTPC Green Energy after a partial divestment during its IPO.

NTPC Green’s Market Performance Since Listing

NTPC Green Energy made its stock market debut on November 27, 2024, at a modest 3% premium. The Rs 10,000 crore issue saw strong investor interest, with a subscription rate of 2.42 times in the primary market.

However, the stock hasn’t had the best start in 2025. Year-to-date, NTPC Green share price has plummeted over 17%, leaving many investors questioning the stock’s future trajectory.

Financial Performance: A Mixed Bag

Despite the recent decline in stock price, NTPC Green Energy’s financials show both strengths and weaknesses.

Strong Profit Growth

• The company posted an impressive 52.3% rise in net profit, reaching Rs 89.4 crore compared to Rs 58.7 crore in the same quarter last year.

Revenue on the Rise

• Revenue for the quarter increased 4.1% YoY, reaching Rs 460.9 crore, up from Rs 442.6 crore in Q3 FY24.

Declining EBITDA and Margins

• On the downside, EBITDA dropped 2.3%, from Rs 393.6 crore to Rs 384.6 crore.
• EBITDA margin also fell, declining to 83.5% from 88.9% in the previous quarter.

This suggests that while NTPC Green Energy is generating more revenue and increasing profits, its efficiency in managing costs is declining.

What’s Driving Investor Sentiment?

Investors are reacting to a mix of positive and negative signals:

• Lock-in Period Expiry: A large number of shares becoming available for trading creates short-term volatility.
• Strong Profit Growth: The 52.3% rise in net profit is a positive sign for long-term investors.
• Weak EBITDA Margins: Lower profitability margins raise concerns about operational efficiency.
• Broader Market Trends: Renewable energy stocks have been under pressure, and NTPC Green is no exception.

Is NTPC Green Energy Still a Good Investment?

The NTPC Green share price drop presents both risks and opportunities. Let’s look at both sides.

Reasons to Stay Optimistic

1. Strong Government Backing: NTPC Green Energy is a ‘Maharatna’ public sector enterprise, giving it strategic importance in India’s clean energy push.
2. Growing Renewable Portfolio: The company continues expanding its solar and wind power assets, positioning itself as a long-term leader.
3. Stable Parent Company: Being a subsidiary of NTPC, India’s largest power producer, provides financial security and industry credibility.

Potential Risks

1. Short-Term Volatility: The expiry of the lock-in period might bring temporary instability.
2. Declining Margins: Investors are cautious about the EBITDA margin drop, which indicates rising operational costs.
3. Sector-Wide Pressure: The renewable energy sector is experiencing market fluctuations, affecting stock performance.

Expert Predictions on NTPC Green Share Price

Market analysts believe that NTPC Green share price could remain volatile in the short term due to shareholder sell-offs. However, the long-term outlook remains positive, driven by India’s push for renewable energy and NTPC Green’s strong backing.

Final Thoughts: Should You Buy, Hold, or Sell?

If you’re a long-term investor, the current dip might be a buying opportunity before the stock stabilizes. However, short-term traders should be cautious as NTPC Green share price could see further fluctuations in the coming weeks.

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Conclusion

NTPC Green Energy’s stock decline after the lock-in period expiry is a normal market reaction. While the short-term outlook may seem uncertain, the company’s strong fundamentals and long-term growth potential make it a stock worth watching. Investors should keep an eye on upcoming earnings reports and market trends before making a decision.