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Greenko laying foundations

RESULTS: Rupee weakness has hit the headline figures at Indian renewable power group, Greenko – but the underlying story remains compelling
July 19, 2012

Behind the scenes, Indian renewable power developer Greenko has been making robust progress and has raised funds to push towards its target of having 1GW of generating capacity by 2015. And, even though these figures were distorted by the weakening rupee, Greenko is now ready to push on – leaving the share price reversal seen in recent months as a potentially attractive entry point.

IC TIP: Buy at 106p

Greenko remains at a relatively early stage in its development and has just 260MW of operating capacity so far. But it also has 500MW-worth of projects under construction and a further 900MW classed as "in development". It has also raised £130m from investors, such as Standard Chartered and GE, during the past year and boasts undrawn debt facilities totalling over €250m (£197m). Given India’s problem of meeting the fast-growth demand for power from its fast-growth economy, then there's plenty of opportunities for renewable power players, too. The company is primarily installing hydro and wind power capacity, having judged its biomass operations to be non-core.

Broker Arden Partners expects adjusted pre-tax profit of €15.8m for 2013, giving EPS of 6.94¢ (2012: €13.9m/6.95¢).

GREENKO GROUP (GKO)

ORD PRICE:106pMARKET VALUE:£150m
TOUCH:105-108p12-MONTH HIGH:220pLOW: 99p
DIVIDEND YIELD:NILPE RATIO:19
NET ASSET VALUE:€1.38*NET DEBT:39%

Year to 31 MarTurnover (€m)Pre-tax profit (€m)Earnings per share (¢)Dividend per share (¢)
200813.12.806.10nil
200913.93.203.90nil
201019.34.863.42nil
201144.414.07.44nil
201237.913.96.95nil
% change-15-1-7-

Ex-div:-

Payment:-

*Includes intangible assets of €79.4m, or €0.56 per share

£1=€1.27