Nishat Chunian Power Limited (NCPL) announced its 4QFY23 financial result today, where the company posted a profit after tax (PAT) of PKR 1,225mn (EPS: PKR 3.33), up by 104% YoY, compared to PKR 600mn (EPS: PKR 10.77) in same period last year. This took the FY23 earnings to PKR 3,957mn (EPS: PKR 10.77), up by 58% against PKR 2,504mn (EPS: PKR 6.82). Surprisingly, the company did not announce any dividend along with the result.

Result Highlights

· During 4QFY23, net sales witnessed a decline of 56% YoY to PKR 4,352mn, owed to lower dispatches, which are down by 59% YoY to 110 GWh. Fall in dispatches are witnessed amid decline in electricity demand in the country attributable to economic slowdown. Also, additions of relative cheaper power plants reduced the generation demand from NCPL. During FY23, sales decreased by 28% YoY mainly due to 47% YoY decline in dispatches to 476 GWh.

· During 4QFY23, gross margins of the company increased by 23ppts YoY to 33%. The rise in margins is attributable to lower load factor, we view.

· Finance cost decreased by 33% YoY to PKR 178mn during 4QFY23 due repayment of short-term borrowings.

Recommendation

We have a Hold call on the scrip with a Jun’24 target price of PKR 21.03/share

Courtesy – AHL Research