Indus Gas (INDI) may have lost nearly half its market value over the past 12 months, but it still managed to drive up half-year operating profits by 29 per cent. The group benefited from the expansion of its India-focused gas businesses, together with the predictability afforded by off-take agreements with regional power utilities.
Demand remained consistent through the period as a result of stable operations at the 270MW Rajasthan state-owned power plant located at Ramgarh. This relative predictability meant there was no recourse to take-or-pay contracts; a "pleasing result for all parties", according to the group's chairman, Peter Cockburn.
Stable demand levels usually translate into pricing leeway. The Gas Authority of India (GAIL) purchased 5.30bn cubic feet of gas during the period as Indus's main customer. Indus said it continues to generate around $5 per million British thermal units, the same as a year earlier, but management confirmed that tripartite negotiations are under way with GAIL and Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL) with a view to a possible price revision. Indus also said that it has made progress towards finalising the gas price for the second contract with GAIL and RRVUNL for additional gas supplies to a new 160MW turbine at Ramgarh.
Arden Partners estimates EPS of 23.1¢ for the March year-end, up from 16.9¢ in 2015.
| INDUS GAS (INDI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 121p | MARKET VALUE: | £221m | |
| TOUCH: | 116-126p | 12-MONTH HIGH: | 233p | LOW: 79p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 20 | |
| NET ASSET VALUE: | 52¢* | NET DEBT: | 232% | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 17.0 | 13.0 | 4.00 | nil |
| 2015 | 22.6 | 14.3 | 4.00 | nil |
| % change | +33 | +10 | - | - |
Ex-div:- Payment:- £1 = $1.48 | ||||
