Cenkos has been encouraged by news from Indian power generator OPG Power Ventures that the full 300 megawatt (Mw) plant at Gujarat is close to coming on stream.
The company announced on Monday that the construction of the multi-circuit transmission line for power evacuation of the 300Mw Gujarat plant has now been completed. Subject to testing and commissioning of other line-related infrastructure, the second 150Mw unit is expected to be commissioned in January 2016, as opposed to October 2015, which was the commissioning date the company had been hoping to achieve.
The company also announced that it has entered into three year sales agreements with industrial customers for the output of its units II and IV of its 414Mw Chennai plant.
“With the existing plants in Chennai performing strongly, this puts the group on track to meet our full year forecasts,” Cenkos said, adding that it backed management to deliver an optimal mix of long term contracts and shorter term, higher tariff, deals.
Cenkos repeated its 'buy' recommendation, saying that with free cash flow anticipated next year of more than £40mln, OPG will quickly reach an inflexion point where it can self-finance growth opportunities, or pay out an attractive dividend to shareholders, or both.
Cantor Fitzgerald also rates the shares a 'buy', and has a 134p target price, saying the timing of the commissioning is not significant while the pricing news is positive.
“While the previous expectation was for an October start, we had already built in a degree of conservatism over the ramp-up of the Gujarat project into our model and for the moment we remain happy with our forecasts despite an apparent delay in the commercial operations of this unit. OPG says that current trading is in line with expectations based on the performance of the existing operating assets,” Cantor Fitzgerald said.
Datafeed and UK data supplied by NBTrader and Digital Look.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.