Nishat Chunian Power Limited (NCPL) announced its 1HFY24 financial result today, where the company posted a profit after tax (PAT) of PKR 2,425mn (EPS: PKR 6.60), up by 32% YoY compared to PKR 1,838mn (EPS: PKR 5.00) in the SPLY. In 2QFY24, the company posted earnings of PKR 1,040mn (EPS: PKR 2.83) vis-à-vis PKR 878mn (EPS: PKR 2.39) in the corresponding period, an increase of 18% YoY.

Result Highlights       

In 1HFY24, the topline fell by 17% YoY, arriving at PKR 8,723mn as compared to PKR 10,567mn, on the back of lower dispatches amid an overall drop in electricity demand for FO-based power generation due to the induction of relatively cheaper power plants. During 2QFY24, net sales decreased 3% YoY to clock in at PKR 1,917mn compared to PKR 1,980mn due to the aforementioned reasons.

During 1HFY24, gross margins settled at 30% as compared to 23% in SPLY, whereas in 2QFY24, the gross margins of the company clocked in at 58% vis-à-vis 60% in 2QFY23.

In 2QFY24, finance costs decreased by 71% YoY, despite higher interest rates, to arrive at PKR 78mn compared to the same period last year. The decline is mainly attributable to a reduction in short-term borrowings to PKR 3,889mn as of Sep’23. This took 1HFY24 finance cost to settle at PKR 219mn, a decline of 53% YoY.

Recommendation

We have a BUY call on the script with a target PKR 29.6/share price.

Courtesy – AHL Research