Final results from electricity generator OPG Power Ventures plc (LON:OPG) showed a company making big strides in the Indian power market.
The firm described the year to end March as something of a "landmark" after an eight year journey, during which it delivered record results, completed its 750 MW (megawatt) programme and is now embarking on an exciting new phase of development.
During the fiscal year, OPG generated a record 3.2 billion units of electricity.
Uplift in capacity
Revenues rose by 28% to £128 million, while a 480 MW uplift in capacity was delivered progressively through the year.
Profit before tax was up 32% to £28.6mln, and operating margins were higher than the year before, tracking delivered coal prices.
Net debt for the 2016 year stood little changed at £254.1mln vesus £250.6mln the previous year.
Underlining progress, first quarter revenues of the new year ( three months to June 30) - were around £57mln reflecting the repercussion of the ramp up of the newly delivered capacity.
The AIM firm also spelled out its dividend policy to investors.
Having already said it would make a payout in calendar 2016, the plan was to distribute around 15% of net earnings with the intention the grow that figure over time.
Analysts at City broker Cantor Fitzgerald suggested OPG could pay out up 33% of earnings longer term.
Analyst Adam Forsyth had highlighted that the underlying business was progressing well and that first quarter revenues were "encouraging". He repeated a 'buy' stance and target price of 130p - almost double the current price of around 68p.
Forsyth said: "OPG has delivered full year results broadly in line with consensus and ends the year with a stronger net debt position than we had expected."
India the fastest growing major economy of the world
India's industrialisation is growing rapidly. It in the fastest growing major economy of the world with GDP growth of over 7% in the last fiscal year.
Electricity is key and a further 480 GW will need to be added to reach the government's stated per capita consumption target of 1800 kWh by 2034 and to provide electricity for around 260 million people.
The group's power operations are in leading industrialised states of India – 450 MW in Tamil Nadu and 300 MW in Gujarat.
More growth to come
For the next phase of growth, OPG has set a target to build at least 300 MW of solar energy projects, with its first project (containing four operations totalling 62 MW) under development in Karnataka - one of the most industrialised states for an investment of £45 million.
This is expected to be funded from a combination of internal cash and debt and the firm reckons all four of these new projects capable of generating cash flow by June 2017.
The group has signed long term (25 year) power purchase agreements (PPAs) at an average tariff of Rs 5 with Karnataka State Electricity Distribution companies.
The targeted return levels are expected to be met without any subsidies and OPG expects these projects to deliver long term returns ahead of its average cost of capital.
In August, the group said chief executive Arvind Gupta had accepted the role of executive chairman following the retirement of chairman Munish C. Gupta.
Gupta oversaw the company’s admission to AIM back in 2008 and stepped down this month following an AGM.
Jeremy Beeton joined the board as an independent non-executive director.