HUBC and NPL Report Mixed Results for First Quarter FY25 Amid Market Shifts

Islamabad: The Hub Power Company Ltd (HUBC) and Nishat Power Limited (NPL) have reported their financial results for the first quarter of FY25, with mixed performances attributed to various operational and market dynamics. HUBC saw a slight year-over-year profit increase but a quarterly decline, while NPL experienced a decrease in profits due to operational challenges.

According to AKD Securities Limited, HUBC is expected to report a net profit after tax (NPAT) of PkR18.3 billion, translating to an earnings per share (EPS) of PkR14.1, a 7% increase year-over-year but a 10% decrease from the previous quarter. This performance is largely due to reduced finance costs from lowered debt levels, despite a 10% annual drop in revenue to PkR30.5 billion and lower generation levels with a company-wide utilization rate of 14.1%. Notably, this quarter marks the last inclusion of capacity revenues from HUBC’s base plant in consolidated results due to the expiration of its contract.

NPL reported a NPAT of PkR1.3 billion, with an EPS of PkR3.65, down by 11% year-over-year. This decline is primarily due to lower gross margins affected by a reduced load factor and assumed generational efficiency of 44%. However, other income for NPL saw a significant increase, boosted by high levels of cash and short-term investments.

The operational challenges for NPL were compounded by lower generation from Residual Fuel Oil (RFO) sources, which was mitigated by ample hydel availability during the summer season. Despite these challenges, both companies did not announce cash dividends for the period, though any future payouts would be seen as a positive development by the market.

The investment perspective highlights significant changes in the power sector, with authorities negotiating take-and-pay conversions under the 2002 Power Policy. This includes NPL, where a shift to a take-and-pay model could impact the plant’s earnings profile, although its strong net receivables position and book value should support near-term dividend distributions. The anticipated market model and potential capacity payment structures may also enable NPL to leverage its thermal efficiency and proximity to demand hubs through industrial wheeling agreements.

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