Karachi: Hub Power Company (HUBC) reported a significant decrease in its earnings for the first quarter of fiscal year 2026, with earnings per share (EPS) dropping by 39% year-on-year to Rs9.0. The company attributed the decline to the termination of its base plant, aligning with expectations set by analysts.

Despite the drop in earnings, HUBC declared a dividend of Rs5 per share for the quarter, surpassing the anticipated Rs3 per share. Gross profit margins contracted to 44% from 56% in the same period last year, which was attributed to both the base plant's termination and a revision in the Narowal plant's power purchase agreement.

The company's topline also saw a notable decrease, falling by 46% year-on-year to Rs17.4 billion. This drop is also linked to reduced energy payments amid decreased utilization rates. On a quarter-on-quarter basis, earnings saw a modest rise of 2%.

Administrative expenses surged by 276% year-on-year to Rs623 million, although they decreased by 4% from the previous quarter. In contrast, finance costs saw a significant reduction, dropping by 54% year-on-year to Rs2.5 billion, thanks to a substantial decrease in debt levels and a declining interest rate environment.

HUBC's profit from its associate and joint ventures increased slightly, rising by 4% year-on-year to Rs10.8 billion. The effective tax rate for the quarter stood at 19.3%, compared to 12.5% in the same quarter of the previous fiscal year.

The company's cash and cash equivalents reached an all-time high of Rs51.4 billion as of September 2025, driven by improved recoveries from its power plants. Despite the financial challenges, analysts have maintained a "BUY" recommendation on HUBC, with the stock trading at a projected price-to-earnings ratio of 5.8 for FY26 and 5.3 for FY27.