Nishat Power Limited (PSX: NPL) has closed the financial year 2023 with a 23 percent year-on-year growth in its bottomline.
The power sector has been facing lower load factors due to significantly lower demand for electricity pushed partly by weary economic development and partly due to rising cost of power due to the ballooning circular debt and sector’s depleting liquidity. The sector has seen massive decline in power generation, which has kept the topline of power companies in check. NPL’s revenues fell by three percent year-on-year in FY23 mainly due to 32 percent year-on-year lower dispatches of electricity during the year, and a load factor of 31 percent. The decline in sales revenue was greater in 4QFY23 (37% YoY) where the total dispatches were down by 38 percent year-on-year with a load factor of 39 percent.
Despite fall in revenues, Nishat Power Limited’s gross margin benefitted from lower load factors that drove down the cost of sales (as fuel cost - a large component of the total cost remained low). As a result, NPL’s gross profit was up by 18 percent year-on-year. Also, the growth in gross profit for 4QFY23 was hefty 85 percent year-on-year, which according to a research note by Arif Habib was due to lower period weighing factor applicable on capacity payments last year.
Growth in the company’s bottomline was also driven by lower finance cost during the period due to lower short term borrowings. NPL’s finance cost was down by 62 percent year-on-year. While there was growth in administrative and other expenses, the finance cost for NPL was down by 62 percent year-on-year that contributed to the net profit growth. Other income was also up by 96 percent year-on-year.
The company did not announce any dividend for FY23, which was against the market sentiments as the IPP was expected to announced dividend after receiving Rs2 billion out of total Rs142 billion released by CPPA in June-23 to bring down circular debt.
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