HUBCO Reports a Healthy Increase in Profits for FY21

Hub Power Company Ltd (HUBCO), one of the largest private power producers in the country, announced its consolidated financial results for the year ended June 30, 2021.

HUBCO’s consolidated profits improved massively by 33.70 percent to Rs. 34.83 billion as compared with Rs. 26.06 billion recorded in FY20. The rise in profitability was due to higher dollar indexation for the base plant, reduced finance cost, lower taxation charge, and lower operation and maintenance expenses.

The company also announced a final cash dividend of Rs. 5/share, which is in addition to the interim dividend already paid at Rs. 7/share.

The company reported an increase of 13.06 percent in revenue for the year to Rs. 54.63 billion, compared with Rs. 48.32 billion a year earlier.

Earnings per share came in at Rs. 25.97, compared with Rs. 19.31 last year.

“The surprise dividend of Rs5/share is likely alleviated concerns on the company’s cash-flow crunch and created expectations of a sustainable payout stream,” KASB Research said in a market note.

Financial cost fell by 38.32 percent to Rs. 7.34 billion as compared with Rs. 11.90 billion last year. According to the KASB report, “In FY21, financial charges dipped by 38 percent year-on-year because of the 625bps reduction in the interest rates to 7 percent. While the IPPs payment may be responsible for HUBCO’s higher payout, we think the company’s dividend stream is likely sustainable.”

HUBCO’s gross profits rose by 8 percent YoY to Rs. 32.871 billion as compared to Rs. 30.49 billion due to the rising return on equity component of the base plant and one percent depreciation of the rupee.

Share of profits from HUBCO’s investments rose by 13 percent year-on-year to Rs. 15.501 billion because of a longer operational period.

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