Hub Power Profit Falls 39% in 1QFY26

Earnings decline on base plant termination; Rs5 dividend declared as cash reserves hit record Rs51bn.

Hub Power Company Limited (PSX: HUBC) reported earnings of Rs11.6 billion for the first quarter of FY26, translating into earnings per share (EPS) of Rs9.0, down 39% year-on-year but marginally higher by 2% on a quarterly basis, the company said in a filing to the Pakistan Stock Exchange on Thursday. The results came broadly in line with market expectations.

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The profit decline was primarily attributed to the termination of HUBC’s base power plant and the revised power purchase agreement (PPA) for the Narowal plant, which significantly reduced capacity and energy payments. Consequently, gross profit margins fell to 44% in 1QFY26, compared with 56% in the same period last year.

Revenue for the quarter dropped 46% year-on-year to Rs17.4 billion, largely reflecting lower utilization levels and reduced energy payments following structural changes in the company’s generation portfolio. On a sequential basis, topline declined 7%, also impacted by lower dispatch requirements. Despite this, HUBC declared a higher-than-expected interim cash dividend of Rs5 per share for the quarter, compared with market expectations of Rs3.

Income from associates and joint ventures rose 4% year-on-year to Rs10.8 billion, underpinned by stable contributions from China Power Hub Generation Company (CPHGC) and other joint projects. Finance costs fell sharply by 54% YoY and 10% QoQ to Rs2.5 billion, supported by declining interest rates and significant debt reduction. Administrative expenses increased substantially — up 276% YoY to Rs623 million — though down 4% QoQ, as the company absorbed higher operational and regulatory costs.

HUBC’s effective tax rate for the quarter was 19.3%, compared with 12.5% in the corresponding period last year and 19.9% in the previous quarter. The company’s liquidity position strengthened markedly, with cash and cash equivalents reaching an all-time high of Rs51.4 billion by September 2025, driven by improved recoveries from power plant receivables.

Analysts noted that while the termination of the base plant has compressed topline and margins, HUBC’s balance sheet remains strong, supported by robust cash generation from associates and lower financing costs. The company continues to benefit from the government’s focus on improving circular debt recoveries in the power sector.

At current valuations, HUBC trades at FY26E/FY27F price-to-earnings multiples of 5.8x and 5.3x respectively, maintaining its appeal as a high-dividend, cash-rich utility play in Pakistan’s energy sector.