Shares in OPG Power Ventures (LON:OPG) were higher in morning trade after the India focused gave an upbeat assessment of prospects that included a reference to future dividend payments.
Output from its power plants rose to 600 megawatts in the quarter ended September 30 compared with 270 megawatts in the same period last year. It is expected to hit the 750 megawatt mark by January.
It also has a diversified sales mix with 257 megawatts earmarked for industrial customers tied into three year contracts, 80 megawatts supplied to the Tamil Nadu Generation and Distribution Company for 15 years and 77 megawatts on short-term supply.
It said coal costs, the major variable expense, had remained subdued during the three months. The company currently has five plants in operation at Chennai and Gujarat.
Chief executive Arvind Gupta said: "The developments in sales mix add visibility to our transformational growth.
“If we can maintain our course, my colleagues and I on the board look forward to the prospect of executing further expansion plans and introducing a dividend policy in the next few months when we expect the Gujarat plant to be fully operational."
The shares rose just under 2% to 81.6p – way short of Cantor Fitzgerald’s target price of 134p, which restated its ‘buy’ advice earlier.
Cenkos is also a fan, and sees no reason for the mark-down that has occurred in recent months, with OPG off around 18% since August.
“[The] stock has come under pressure since the summer and returned to levels it was trading at this time last year despite tremendous progress in the past 12 months,” said analyst Andrew Blain.
“In our view the stock remains good value with a step change in earnings and cash flows to come next year, a maiden dividend anticipated and long term growth potential.”