Scripscan:Orient Green Power Company Ltd
Code:533263
Cmp:17
Story:Orient green power is one of India's leading renewable energy producers with 213 mw of installed capacity running. It currently operates four wind farms with aggregate installed capacity of 172.5 mw - 85% of which is in Tamil Nadu and the rest in Andhra Pradesh.It also operates five biomass plants and one biogas plant with aggregate installed capacity of 40.5 mw in Tamil Nadu, Maharashtra and Rajasthan.It has a diverse customer base with a mixture of off-take arrangements.Its customers include SEBs, distribution companies, private commercial and industrial consumers and a power trading company. It benefits from the support and commitment of Shriram EPC Limited ("SEPC"), one of the promoters, through access to SEPC's operational expertise, experienced technical staff and an increased ability toaccess a network of suppliers and customers based on the strength of SEPC's brand. It has also engaged SEPC as the turn-key contractor for most of the biomass projects.The company provides a unique green power exposure in India. Government policy appears supportive, setting the renewable generation target at 15% of the total power generation mix in 2020.While the target may be bullish, it supports positive pricing policy over the medium term.Fundamentals of the sector are very strong given the fast growing energy demands of an economy growing at a rate of 8-9%.OGPL doesn’t have any direct comparable.Its returns are heavily dependent on government policy and regulations, thus, the company is more comparable to regulated power utilities. The cmp is at a discount to its bookvalue which is nearly unheard of in the sector.Its peer regulated power utilities are priced at 1.4-2 times of book value.Aggressive capacity expansion will fuel the topline growth for the company.Orient green power at 800crs marketcap or at 17rs is a buy for me.
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