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OPG Power on track for October switch on, says broker

Published: 21:50 06 Aug 2015 AEST

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Capacity will rise to 750Mw when the new plants are in operation.

OPG Power’s (LON:OPG) new power plants should be up and running in October as scheduled, according to Canaccord, which has just visited the sites in India.

Capacity will rise to 750Mw when the new plants come on stream, which will drive strong cash flows and allow a reasonable dividend as well as reinvestment in new opportunities.

The house broker has a price target of 134p currently, but said the potential for further capacity to be added at Chennai and Gujarat can lift this higher.

“The Indian power market remains attractive to those who can execute and we think that OPG has proved itself several times over in this regard. “

The two new coal-fired stations are the 180 Mw Chennai IV project and the 300 Mw Gujarat project. Chennai IV uses compact equipment which has allowed a larger plant to be built on a small site.

Gujarat will be ready once the second transmission line is completed and Canaccord is confident its whole 300Mw will be available to make commercial sales from October.

Meanwhile, competition in India has been hampered by the government’s de-allocation of mines and a reluctance of State Electricity Boards to sign long term power purchase agreements with these units.

Against this background, OPG's flexible approach stands out with coal sourced from both India and Indonesia.

Buy says the broker. Shares were 100p today.

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