Nishat Power Limited (NPL) witnessed decent top-line growth in its recently released financial result for the first half of FY18. On a comparative basis, 1HFY18 saw a 17 percent increase in the IPPs revenue to when compared to 1HFY17.
There appear to be two reasons for this top-line growth. The first is the increase in electricity dispatches which clocked in at 285 GWh, a 5 percent increase as compared to the corresponding period in the previous year.
However, the boost in revenue came majorly due to the increase in furnace-oil prices during the period. FO prices have increased by more than 20 percent on a year-on-year basis and have brought good fortune for NPL as a result.
As a result of the decent top-line growth, gross profits of NPL also increased by 17 percent. However, the issue of outstanding receivables from the National Transmission and Despatch Company (NTDC) continue to plague NPL, along with the majority of other IPPs.
According to its first quarter report, NTDC owed almost Rs9.6 billion to NPL, out of which Rs7.3 billion were classified as overdue by the company. NPL has not provided dividend this year so far and market analyst believe the rise in receivables which has caused liquidity crunch for a lot of IPPs, might be the reason for foregoing dividend.
Finance cost for the period saw negligible change as NPL’s debt is mostly long term based so increase in mark-up on short term borrowings did not have any significant impact on financing cost. NPL’s bottom-line saw an increase of 21 percent in 1HFY18 and its EPS has increased to Rs4.72 during the period.
However, the stock has been taking a hammering when compared to benchmark KSE-100 index since the release of its 1QFY18 result. A potential reason could be the lack of dividend pay-out by the company as power stocks are generally held by investors because of the reliable dividend streams they give out.
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