Karachi, The Hub Power Company (HUBC) and Nishat Power Limited (NPL) are expected to report substantial earnings growth for the third quarter of FY24, driven by increased power generation and improved operational efficiencies.

According to AKD Securities Limited, Hub Power is projected to post a net profit after tax (NPAT) of PkR16.1 billion for the quarter, up 43% year-over-year, primarily due to higher gross margins from the non-utilization of fuel oil-based plants and a steady overall generation profile. The company’s total generation utilization stood at 8.6%, with significant contributions from various power plants. Despite a slight drop in total revenue to PkR29.4 billion, a 2% decrease from the previous quarter, the company is expected to announce an interim dividend of PkR4.0 per share.

Nishat Power Limited is anticipated to report a NPAT of PkR1.13 billion, a 36% increase year-over-year. This growth is attributed to improved gross margins due to cost savings and a significant increase in non-operating income from short-term investments. The plant utilization factor increased to 21%, driven by higher generation from residual fuel oil (RFO) sources during the late winter season. NPL has been recommended as a 'Buy' with a target price of PkR40 per share, offering a potential 25% upside from its last closing price.

Both companies have been highlighted for their promising dividend yields and strong performance prospects within the power generation sector, reflecting their strategic operational adjustments and market positioning.