The structural drivers of Indian energy generator OPG Power Ventures (OPG) are not going anywhere – the chasm between demand and reliable supply of power from the country’s rapidly growing population. This has driven solid profit growth for the energy generator during the past four years as it has built up its operational capacity. OPG runs coal-fired plants in Gujarat and Chennai, with an operating capacity of 750 megawatts (MW).
With the plant infrastructure now in place, the focus for management this year will be on ramping up generation to maximise revenues, particularly at its 300MW Gujarat plant. Power sales from this plant have so far been to industrial customers on short-term contracts. However, management has gained permission to sell its power in certain states outside Gujarat in order to diversify its income stream and gain access to more attractive energy tariffs.
Even after heavy flooding in Chennai at the end of last year, management still expects trading this year to be within market expectations. That’s a Bloomberg consensus adjusted EPS of 7.1p for 2016, from 4.8p last year. Chief executive Arvind Gupta told us at the time of OPG’s half-year results in December that management intends to pay a maiden dividend during the 2017 financial year. Trading on 11 times earnings, we think the shares constitute a thematic buy."
I sold out of EAS a few weeks ago as the SP was going nowhere and guess what? Monday there was an offer for the company and the SP jumps 40%. I am realising that long term means years not months and IMO this is a reliable business producing a product that India is short of. My other comfort is the Guptas have large holdings so sooner or later they will want the company to start paying dividends.
yes it is difficult to understand - everything seems to support a well founded company with good prospects - well we will just have to hunker down and wait at least here there is not the embarrassing drivel and some of it very foul as over on 88e
How is it possible today with no buy trades and such a large volume of sell trades and the share price still went up a fraction.I dont like it and i am worried whether we may get a unpleasant surprise with this share! Any opinions out there?
Unless people know something I don't, I think the sellers have just been liquidating cash to invest in fast moving shares elsewhere such as 88e. I think eventually the short termers will be gone and this can build on the basis of long term investors who don't necessarily expect overnight fireworks. I personally feel that this is a good safe bet at this level.
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