Karachi: Hub Power Company (HUBC) reported a 152% year-on-year increase in earnings for the second quarter of fiscal year 2026, driven by amendments to the power purchase agreement implemented in the previous year. The company announced earnings of Rs10.6 billion, with an earnings per share (EPS) of Rs8.19. However, the quarterly results fell short of industry expectations, with profits declining by 9% compared to the preceding quarter due to a higher effective tax rate.
According to JS Global, the effective tax rate escalated to 23.8% in the second quarter, compared to 38.7% in the same quarter of the previous year and 19.3% in the first quarter of FY26. This increase contributed to a 5% year-on-year decline in the company's half-yearly profits, which totaled Rs22.3 billion, with an EPS of Rs17.2.
The company's gross profit rose by 16% year-on-year to Rs7.4 billion in the second quarter, largely due to a lower base effect following the reversal of interest on overdue receivables after an amendment in the power purchase agreement. Additionally, profits from associates and joint ventures rose by 7% year-on-year, driven by higher contributions from ThalNova and Mega Motors.
Finance costs decreased significantly by 44% year-on-year and 8% quarter-on-quarter to Rs2.3 billion, attributed to declining interest rates and reduced debt levels. On an unconsolidated level, HUBC recorded a dividend income of Rs7.8 billion in the second quarter, mainly from Hub Power Holding. Notably, ThalNova Power declared a dividend following the announcement of their Project Completion Date in October 2025.
In line with expectations, HUBC declared a dividend of Rs5 per share for the second quarter, bringing the total dividend for the first half of FY26 to Rs10 per share. The company maintains a positive outlook, trading at a projected FY26E/27F price-to-earnings ratio of 6.0/5.5x.
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