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OPG Power Ventures PLC

OPG Power to push on again as coal price pressure eases

Snapshot

OPG owns a 414Mw capacity coal-fired power station at Chennai, Tamil Nadu

Meter

Quick facts: OPG Power Ventures PLC

Price: £0.15

Market: AIM
Market Cap: £59.74 m
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  • OPG owns a 414Mw capacity coal-fired power station at Chennai, Tamil Nadu

  • There is also a 62Mw solar power development north of Bangalore in Karnataka

  • Company has hedged 60% of its coal feedstock requirement for the year to March 2020

 

How is it doing

India-focused OPG Power Ventures PLC (LON:OPG) has re-grouped following major disruption from a spike in the price of seaborne coal.

For the twelve months ended 31 March 2019, the group posted a profit of £14mln compared to a 2018 loss of £100.9mln.

Revenue rose slightly, 0.4%, to £140.6mln in 2019 from £140.1mln in 2018.

Earnings (EBITDA) advanced to £35.3mln, up from £24.7mln.

"The outlook for the Indian economy in general and the power sector in particular continues to be buoyant,” said Arvind Gupta, executive chairman.

“We are maintaining our strategy to build value for shareholders by repaying borrowings.

“In the year under review, we added 5.3p per share to equity holders from deleveraging and are recommending a full year scrip dividend of 0.6p per share.

"By maintaining our focus on the profitable operation of our high quality assets, we expect to continue to reduce debt and pay dividends in order to maximise shareholder value."

In May, the firm revealed it has hedged 60% of its coal requirements for this year against future adverse price movements.

The power plant at Chennai, Tamil Nadu is coal-fired and the hedge covers approximately one million tonnes of coal between June 2019 and March 2020.

Imported coal is one of the main raw materials for the Chennai plant and OPG was badly caught out in 2017 and early 2018 when the seaborne price rocketed.

What the boss says: Executive chairman Arvind Gupta

“The new financial year is expected to benefit from “robust tariffs” and lower coal prices.”

 

Inflexion points

• Further deleveraging – gross loans reduced to £80.4 million,

• Return to cash dividend from scrip currently

• Hedges 60% of the coal requirement for the year 2019-20

 

Blue Sky

Indian economy is expected to be the fastest-growing major economy resulting in high GDP growth and higher demand for electricity.

GDP is set to grow 7.5% in 2019 yet consumption of electricity in India is low by western standards at 1,075 Kwh per person.

Power demand is forecast by OPG to grow 6-7% annually over the next five years

Coal prices have reduced by 4% from the end of September 2018 to the third week of February 2019.

Expansion of solar capability

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