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Case for OPG Power not dented by one-off events says Cantor

Published: 08:57 26 Jan 2017 GMT

picture of power lines
Tamil Nadu's power grid was badly disrupted by cyclone Vardah

India -focused electriicty group OPG Power Ventures PLC's (LON:OPG) latest update indicates it has come through a string of one–off adverse events with only a mild impact, said Cantor Fitzgerald.

In its update, OPG said it had mitigated most of the shock scrapping of high denomination bills by the Indian government, which had affected consumer spending and electricity demand.

Eventually, OPG believes this will have a significant positive on the long term sustainable growth of India's economy.  

In December, though, Tamil Nadu’s Chief Minister, Ms Jayalalithaa Jayaram, died which affected business activity while Cyclone Vardah also severely impacted regional transmission infrastructure and commercial activity. 

OPG’s Chennai plant was affected as well but is gradually resuming full service with load factors expected to normalise from February. 

Due to the lower load factor at Chennai, revenue in the year to March will be around £5-6mln lower than expected.

Broker Cantor remains a buyer even so and said it will adjust its numbers for the update and also to allow for the moves recently in coal prices.

"We think these [events] should not detract significantly from the investment case.

"OPG continues to have a strong set of assets and is well placed to expand these over the next few years."

-- updates for broker comment --

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