LONDON (ShareCast) - (Sharecast News) - Analysts at RBC Capital Markets upgraded Greencoat Renewables to 'outperform' on Wednesday, noting favourable winds had blown the Irish infrastructure company to an inflection point in its development.
RBC felt that Greencoat had clearly delivered on its IPO pledges over the course of 2018, and following its recent equity raise, the firm looked set to have "a healthy growth profile" in the rapidly developing Irish wind market that offers "excellent cashflow visibility".

"We believe GRP should trade at a premium, not a discount, valuation to peers," said RBC.

The Canadian broker, which also upped its target price on the group to €1.20 from its previous €1.10 per share standing, said there were two structural drivers of continued growth in wind capacity across Ireland that should allow Greencoat to continue its expansion before eventually looking to new European geographies - policy and demand.

RBC noted that Irish onshore wind capacity dominates renewables in Ireland and also stated that Ireland was "an outlier" in Europe in terms of electricity demand growth.

"EirGrid forecasts demand could grow by up to 57% over the next decade, largely driven by increased usage from data centres," add the analysts.

With Greencoat trading at around a 5% premium compared to the peer average of 10%, RBC felt now was the time to take advantage of a firm scaled up and ready to benefit from attractive market growth.

"We do not see this discount as warranted, especially given the recently increased scale, growth prospects and excellent cashflow visibility," concluded RBC.

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