One to watch

Published on Wednesday 1 September 2010 23:00

OPG Power Ventures develops and operates power generation plants for industrial consumers in India.

The market is somewhat sceptical of OPG, not only as the group is operating in what can often be challenging industrial and political areas but because the commissioning of previous power plants has not been without incident and delays. On the other hand, India's annual rate of economic growth is well over 6 per cent with a hunger for power.

The latest trading statement was satisfactory, with pre-tax profits for the year to 31 March at 5.45m, somewhat less than the 6.33m the previous year as a result of the expenses involved in construction projects and other non-recurring items. The company said it had cash equivalent of 14.17m in the balance sheet.

Prospective investors must understand that, notwithstanding the apparent robustness of the balance sheet, OPG could well return to the market for further funding, given the costs of individual power stations, but some forecast that earnings per share could be over 25p in three or four years, which would make the current share level a reason to analyse the stock further.

• The value of your investment could fall and you may get back less than you invested. You should take professional advice if you have any doubtOPG Power Ventures about the suitability of this stock for your portfolio.

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