⚡ Flash Summary
KAPCO’s Q1 2025 report shows a mixed performance. The company generated revenue of Rs. 4,156 million after reporting no revenue in 2024, however the cost of sales was greater at Rs. 4,987 Million resulting in gross loss. Net profit was reported at Rs. 4.876 million, significantly lower than the Rs. 1,162 million profit in 2024, leading to a lower EPS of Rs. 0.01 compared to Rs. 1.32 in 2024. Suspension of the Tripartite Power Purchase Agreement (TPPA) adds uncertainty.
📌 Key Takeaways
- 📊 Revenue: Rs. 4,156 Million, a new beginning after Rs. Nil in 2024.
- 📉 Cost of Sales: Rs. 4,987 Million, exceeding revenue.
- 💔 Gross Loss: (Rs. 831.4) Million, reflecting sales difficulties.
- 📉 Net Profit: Rs. 4.876 Million, a decline from Rs. 1,162 Million in 2024.
- 📉 Earnings Per Share (EPS): Rs. 0.01, considerably lower than Rs. 1.32 in 2024.
- 📉 Investment Income: Annualized return drops to 10.05% from 21.58%.
- ⚠️ TPPA Suspension: Effective Oct 1, 2025, adding uncertainty.
- 💰 Disputed Receivables: Rs. 2,499 Million due from Power Purchaser, backed by GoP Guarantee.
- 💸 Mutual Fund Investments: Rs. 38,635 Million for working capital and diversification.
- 🤝 Diversification: Exploring opportunities with WAPDA’s support.
- 🏢 Attock Cement Bid: Joint bid with Fauji Foundation still pending.
- ☀️ K-Electric Projects: NEPRA approval awaited for proposed solar projects.
- 📜 Directors: Nine directors, with eight males and one female.
- ⚡️ Electricity Generation: 151,163 MWh generated during the reporting period.
🎯 Investment Thesis
Given the challenges highlighted in the Q1 2025 report, including the revenue and earnings decline, the suspension of the TPPA, and the various financial and operational risks, a SELL recommendation is warranted. While the company is pursuing diversification opportunities, these are still in preliminary stages and may take time to materialize. Short-term volatility is expected, and the upside potential appears limited. Price Target: Rs. 5.00. Time Horizon: Medium Term.
Disclaimer: AI-generated analysis. Not financial advice.