Nishat Power Limited (NPL) announced its 3QFY21 financial result today where the company posted a profit after tax (PAT) of PKR 658mn (EPS: PKR 1.86), down by 49% YoY compared to PKR 1,288mn (EPS: PKR 3.64) during the same period last year. This takes 9MFY21 profitability to PKR 2,125mn (EPS: PKR 6.00) down by 44% YoY.

Result Highlights

·        During 3QFY21, net sales witnessed an increase of 12% YoY to PKR 2,472mn due to i) higher dispatches and ii) 3.4% YoY PKR depreciation compared with the same period last year. During 9MFY21, sales declined by 17% YoY due to the absence of debt portion and lower furnace oil prices.

·        Gross margins of the company during 3QFY21 dipped by 43pps YoY to 31% due to the absence of debt portion, however, PKR has depreciated 3.4% YoY during 3QFY21.

·        Finance cost has declined by 73% YoY. Lower short term borrowings along with lower interest rates are the primary reasons behind this decline.

Recommendation

·        Currently, we have a BUY call on the scrip with a Dec’21 target price of PKR 35.0/share.

Courtesy – AHL Research