HUBC profit jumps 152% on PPA revision

By Aftab Ahmed • February 24, 2026

Hub Power Company posted Rs10.6bn quarterly profit, up 152% year-on-year after PPA amendments, but earnings slipped 9% sequentially on a higher tax charge, with first-half profit down 5%.

Hub Power Company (HUBC) reported a profit of Rs10.6bn for the second quarter of FY26, surging 152% from a year earlier, driven largely by amendments to its Power Purchase Agreement (PPA) implemented in 2QFY25, according to its filing with the Pakistan Stock Exchange (PSX). Earnings per share stood at Rs8.19 for the quarter.

On a sequential basis, however, profit declined 9% compared with the previous quarter due to a higher effective tax rate. The quarterly result also fell short of market expectations as the tax charge came in above forecasts.

The effective tax rate rose to 23.8% in 2QFY26, compared with 38.7% in the same quarter last year and 19.3% in 1QFY26. This pushed the cumulative 1HFY26 effective tax rate to 21.6%, up from 19.7% in the corresponding period last year. As a result, first-half FY26 profit stood at Rs22.3bn, or Rs17.2 per share, marking a 5% year-on-year decline despite stronger quarterly earnings.

Gross profit increased 16% year-on-year to Rs7.4bn in 2QFY26. The improvement mainly reflected a lower base effect following the reversal of interest on overdue receivables after the PPA amendment. The renegotiation of legacy PPAs with independent power producers was part of a broader government effort to ease circular debt pressure in Pakistan’s power sector.

Pakistan’s power sector continues to grapple with structural inefficiencies and mounting receivables. According to official power division data, circular debt in the electricity chain remains above Rs2.3tn, despite tariff adjustments and subsidy rationalization measures in recent years. The government has renegotiated several PPAs since 2020 to lower capacity payments and reduce financial strain on distribution companies.

HUBC, one of the country’s largest independent power producers, operates a diversified portfolio including thermal, coal, and renewable assets. The company’s profitability has increasingly relied on returns from associates and joint ventures as well as financial income, amid shifting tariff regimes and evolving regulatory frameworks overseen by the National Electric Power Regulatory Authority (NEPRA).

Profit from associates and joint ventures rose 7% year-on-year in 2QFY26. The increase was driven by higher contribution from ThalNova Power and fresh contribution from Mega Motors. ThalNova recently announced its Project Completion Date in October 2025 and declared a dividend, strengthening HUBC’s income stream from associated entities.

Finance costs fell sharply by 44% year-on-year and 8% quarter-on-quarter to Rs2.3bn in 2QFY26. The decline reflected lower benchmark interest rates and reduced debt levels. The State Bank of Pakistan has eased monetary policy over the past year as inflation moderated from record highs, lowering borrowing costs for corporates and improving bottom lines across capital-intensive sectors such as power generation.

At the unconsolidated level, HUBC recorded dividend income of Rs7.8bn in 2QFY26, primarily from Hub Power Holding. The dividend flow underscores the group’s holding company structure and its reliance on upstream cash distributions from operating subsidiaries and joint ventures.

Alongside the results, the company announced a cash dividend of Rs5 per share for 2QFY26, in line with market expectations. This takes the cumulative first-half FY26 dividend to Rs10 per share. HUBC has historically maintained consistent payouts, supported by stable capacity payments under long-term contracts.

The company is currently trading at a forward price-to-earnings multiple of 6.0 times FY26 estimates and 5.5 times FY27 forecasts, based on brokerage projections. Analysts maintain a positive outlook, citing attractive valuations and strong dividend yields.