NLC India Ltd. has entered into a deal with Rajasthan government to for a joint venture with Rajasthan Rajya Vidyut Utpadan Nigam to a number of power plants in the state for an investment of more than Rs 7,000 crore.
Shares of the company rose 6.29% to Rs 232.5 per share on Friday, compared to a 0.01% fall on the Nifty 50 as of 9:59 a.m.
Shares of NLC India Ltd. have surged 10% in the past month and 202% in the past one year.
Key Levels To Watch
Resistance level: Rs 293.75 (Life high made in February 2024).
Support: Rs 193.75 (Three-month low).
Government Stake Sale
Early this month, the government said it plans to sell up to 7%, including 2% in greenshoe, in the mining and power generation company through an open offer. Currently, the government holds 79.2% stake in the company.
The government will sell up to 9.71 crore shares of NLC India, including the greenshoe, according to an exchange filing. "The floor price of the offer-for-sale has been set at Rs 212 per share," the filing said.
The offer for sale was subscribed nearly three times of the base size on the first day.
"Offer for Sale in NLC India Ltd. received enthusiastic response from non-retail investors," said Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said in a post on X.
"The issue was subscribed 2.92 times of the base size (non-retail category). Government has decided to exercise the green shoe option. Retail investors get to bid on Monday, March 11," Pandey said in the post.
About The MoU
The memorandum of understanding is between NLC India and Rajasthan Rajya Vidyut Utpadan Nigam—the electricity generation company of the Government of Rajasthan—to form a joint venture to set up power plants in the state with an investment of more than Rs 7,000 crore.
The two notable projects are the establishment of a 125 MW lignite pit-head thermal power plant in Bikaner district and a 1,000 MW solar power plant.
Additionally, a letter of intent for the setup of an 810 MW solar power plant has already been issued, the exchange filling said.
Projects In The Renewable Space
NLC India's green arm, NLC India Green Energy Ltd., also received a power purchase agreement with Gujarat Urja Vikas Nigam Ltd. on March 6. The subsidiary won a 600 MW solar project in the GSECL Khavda solar park tender floated by GUVNL.
The entire power from the said project will be procured by GUVNL. The PPA tariff for the electricity from the project is Rs 2.705 per kilowatt per hour. The project is set to generate around 1,577.88 million units of electricity per annum with a cumulative generation of 39.447 billion units in its lifetime, according to the exchange filling.
Street View
NLC India is favourably positioned across the energy spectrum, said B&K Securities in a Nov. 13 note. The company's gradual transition from lignite-based capacities to coal based capacities, along with significant capacity additions on the renewable side, will guide future growth, it said.
One analyst tracking the company has a 'hold' rating for the stock, according to Bloomberg data. The average 12-month consensus price target implies an upside of 19%.
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