Nishat Power Limited (PSX: NPL) announced the financial performance for 2QFY23 yesterday with earnings growth of 48 percent year-on-year. The growth in profits came as a surprise because the market was expecting a decline in earnings due to weaker demand in power generation and higher costs. While NPL’s revenues fell by 46 percent year-on-year in 2QFY23, the earnings were seen climbing by 48 percent during the quarter.

2QFY23 topline decline for NPL was driven by lower electricity dispatched during the period by around 90 percent. This was due to weaker electricity demand in the country that an also be seen from weaker power generation in the country in 2QFY23 (a decline of about four percent) including a significant drop in furnace oil power generation. Despite a decline in revenues, the IPP’s gross profits improved with gross margins for 2QFY23 climbing to 53 percent versus 22 percent in 2QFY22. Lower expenses particularly due to lower operations and maintenance-related expenditures, finance cost and higher other income supported to bottomline for the quarter.

Overall in 1HFY23, NPL’s earnings grew by 24 percent year-on-year with a topline growth of 39 percent year-on-year. The growth in revenues for six months was primarily due to growth in 1QFY23 sales. Another element of surprise was the announcement of dividend of Rs2 per share in addition to Rs2 per share already paid.