📉 NPL: SELL Signal (7/10) – Holding of Corporate Briefing Session of Nishat Power Ltd. FY 2025 in Compliance with the requirements of Clause 5.7.3 of the Rule Book – Submission of Presentation for CBS 2025

📌 Key Takeaways

• 📅 Corporate Briefing Session held for FY 2025.
• 🤝 PPA revisions implemented following Task Force engagement.
• ⚡ Tariff model converted to a hybrid ‘take-and-pay’ system effective November 1, 2024.
• 💰 Insurance premium capped at 0.9% of EPC from FY 2026 onwards.
• 📊 ROE and ROEDC components structured under the new hybrid model with 35% fixed and 65% variable.
• 🔄 Working capital cost rebased on inventory, receivables, and pricing.
• 📉 USD-linked foreign O&M indexation capped at 70% if PKR depreciates.
• 🏢 Local O&M indexation capped at the lower of 5% or actual NCPI.
• ❌ GOP will unconditionally withdraw Arbitration under ASA.
• 📄 Outstanding and accrued DP waived until October 31, 2024.
• 🏛️ LCIA Arbitration clause revoked, replaced with Islamabad seated Arbitration.
• ⚡️ Participation in the Power Market at the discretion of the Power Purchaser.
• 📉 Net turnover decreased by (15,447,775) thousand Rs, a 69% drop YoY.
• 📉 EPS decreased from 15.22 Rs to 8.77 Rs, a 42% decrease YoY.

🎯 Investment Thesis

Given the significant decline in financial performance and the uncertainties surrounding the revised PPA terms, a SELL recommendation is warranted for Nishat Power Ltd. The drastic reduction in revenue and shift to a loss-making position raise concerns about the company’s future profitability. The revised PPA terms, while aimed at addressing circular debt issues, introduce new risks and uncertainties. Without a clear indication of a turnaround in financial performance, the investment outlook is negative.