A long-awaited rise in electricity tariffs and the commissioning of new capacity sent earnings to an all-time high for Indian electricity provider OPG Power Ventures (OPG). The poor state of Indian power company finances meant across-the-board tariff rises were necessary, with OPG benefiting from an average 13 per cent rise in prices per kilowatt hour at the same time as the group's new generating capacity came onstream: the combination of these factors caused underlying pre-tax profits to jump by 50 per cent to £13.2m.
The commissioning of the 77 Megawatt (MW) Chennai II project in September brought total generating capacity up to 270 MW, compared with just 20 MW when OPG listed on Aim in 2008. And despite an extended 25-day shutdown at the first plant at Chennai I, OPG's plants produced a load factor of over 90 per cent. Profitability was also helped by favourable international coal prices, which fell by 3 per cent and helped to control average unit costs at a time when domestic coal prices rose. The outlook for tariffs should stay stable for the next few months after OPG forward sold about 90 per cent of its electricity at the higher tariff of 5.50 rupees (6p) per kilowatt hour.
Broker Cenkos Securities forecasts adjusted current year adjusted pre-tax profits of £17.3m and EPS of 3.9p, up from £13.2m and 3.2p, respectively, in 2013.
OPG POWER VENTURES (OPG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 66p | MARKET VALUE: | £232m | |
| TOUCH: | 64.5-67p | 12-MONTH HIGH: | 70p | LOW: 32p |
| DIVIDEND YIELD: | nil | PE RATIO: | 27 | |
| NET ASSET VALUE: | 41p | NET DEBT: | 37% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 7.3 | 6.3 | 1.24 | nil |
| 2010 | 11.5 | 5.4 | 0.32 | nil |
| 2011 | 33.2 | 11.2 | 2.13 | nil |
| 2012 | 45.2 | 2.3 | 0.07 | nil |
| 2013 | 56.2 | 10.5 | 2.48 | nil |
| % change | +24 | +365 | +3443 | - |
