The Hub Power Company FY2026: Associate Earnings and Lower Finance Costs Offset the Hub Plant Exit

Verdict: The Hub Power Company’s FY2026 result is a clear example of how HUBCO’s earnings model has shifted away from the legacy Hub Plant and toward a portfolio of subsidiaries, associates and joint ventures. Consolidated revenue fell 14.7% to Rs71.13 billion and gross profit fell 25.5%, reflecting the disappearance of Hub Plant revenue after the early PPA termination and the renegotiation of Narowal’s PPA. Yet profit attributable to owners rose 7.6% to Rs49.63 billion because the share of profit from associates and joint ventures increased, finance costs dropped sharply, and distributions from the wider portfolio strengthened. The result is therefore better at the bottom line than at the revenue line. The key question for the next cycle is whether those portfolio earnings continue to convert into cash while the group funds new mobility, mining and exploration investments.

Results at a glance

• Company Name: The Hub Power Company Limited
• Ticker: HUBC
• Reporting period: audited year ended June 30, 2026, with a derived analysis of the three months ended June 30, 2026.
• Reporting basis: consolidated figures are the primary analytical basis. The board approved annual audited consolidated and unconsolidated financial statements; the directors state that A.F. Ferguson & Co. audited both without qualification. The March 2026 nine-month consolidated statements were unaudited. Q4 figures below are derived by subtracting those official nine-month figures from the audited full-year result, so Q4 itself was not separately reported or audited.
• Consolidated revenue fell 14.7% to Rs71.13 billion from Rs83.35 billion. Gross profit fell 25.5% to Rs29.69 billion and gross margin compressed to 41.7% from 47.8%.
• Profit from operations declined 10.4% to Rs34.07 billion, but finance costs fell 40.0% to Rs9.14 billion and the share of profit from associates and joint ventures increased 9.7% to Rs45.32 billion.
• Profit attributable to owners rose 7.6% to Rs49.63 billion, with EPS increasing to Rs38.26 from Rs35.56. Total consolidated profit including non-controlling interests was Rs56.26 billion.
• The board recommended a final cash dividend of Rs5 per share. Together with Rs15 per share of interim dividends already paid, FY2026 distributions total Rs20 per share.

AlphaGen model outputs

The following are AlphaGen model outputs, not company-reported figures:

• Alpha QoQ Score: 84.26
• TTM Performance Score: 52.56
• 3Y Business Perf Score: 53.79
• Sector Leadership Score: 51.38

What improved

The biggest improvement sits below operating profit. Finance costs fell by roughly Rs6.10 billion, or 40%, to Rs9.14 billion. Management attributes the decline to debt repayment and lower interest rates. The balance sheet supports the deleveraging part of that explanation: long-term loans, current maturities and short-term borrowings together fell to about Rs72.43 billion from Rs84.11 billion, a decline of roughly 13.9%. The State Bank’s policy rate stood at 11.5% by June 2026, while the company also reduced its debt base, so both the rate environment and balance-sheet actions helped reduce the financing drag.

Portfolio earnings also improved. HUBCO’s share of profit from associates and joint ventures rose to Rs45.32 billion from Rs41.31 billion, an increase of 9.7%. That line alone exceeded consolidated profit from operations, which shows how important non-consolidated investees have become to group economics. The company’s September briefing also states that the higher consolidated profit was driven by stronger associate earnings and lower finance costs, partly offset by the loss of Hub Plant revenue.

The operating evidence behind those portfolio earnings is constructive. HUBCO says its operating subsidiaries, associates and joint ventures supplied 5,363 GWh to the grid during FY2026. TEL generated 1,822 GWh, ThalNova 1,824 GWh, CPHGC 1,198 GWh, Laraib 357 GWh and Narowal 162 GWh, while the legacy Hub Plant generated none. The two 330 MW Thar plants together supplied 3,646 GWh, and both TEL and ThalNova declared and disbursed maiden dividends after reaching their project completion milestones. CPHGC also paid a sizable dividend during the year. Those cash distributions matter because HUBCO is increasingly a portfolio owner rather than simply the operator of one large parent-level generating asset.

The derived June quarter was stronger than the full-year revenue trend suggests. Subtracting the official nine-month statements from the audited full-year numbers gives Q4 revenue of about Rs20.55 billion, up 9.6% year on year. Derived Q4 gross profit was about Rs8.08 billion versus Rs8.42 billion, so gross margin remained softer at roughly 39.3% versus 44.9%. However, finance costs fell about 18.3% and the share of profit from associates and joint ventures rose about 18.8%. Profit attributable to owners works out to roughly Rs16.57 billion, around 39.4% above the comparable derived quarter, with derived EPS of about Rs12.77 versus Rs9.16.

That Q4 bottom-line jump needs an important qualification. The combined annual tax and levy charge less the nine-month tax charge implies only about Rs268 million of tax and levy in the derived June quarter, versus about Rs3.13 billion in the comparable period. The full-year filing does not provide a standalone Q4 tax bridge, so this year-end effect should not be treated as a repeatable operating driver. The cleaner recurring positives in Q4 were lower finance costs and higher associate/JV earnings.

What weakened / needs attention

The core consolidated revenue and gross-profit lines weakened materially. Revenue fell by Rs12.23 billion and gross profit by Rs10.14 billion. The company explicitly links lower consolidated revenue to the early termination of the Hub Plant PPA and the FY2025 renegotiation of the Narowal PPA. At the parent-company level, the structural change is even clearer: unconsolidated turnover was nil in FY2026 versus Rs13.21 billion in FY2025 and Rs41.53 billion in FY2024. This is not a temporary sales dip. HUBCO has deliberately moved from a parent-level generation model toward an investment-holding and diversified group model.

Gross margin also compressed by about six percentage points. Cost of revenue fell only 4.8% while revenue fell 14.7%, so the revenue reset was not matched by an equivalent reduction in consolidated generation costs. Other income rose strongly to Rs7.38 billion and other operating expenses fell to Rs1.00 billion from Rs4.02 billion, helping cushion operating profit, but profit from operations still declined 10.4%. The quality of the FY2026 earnings improvement therefore rests more on financing and associate economics than on consolidated gross-profit expansion.

Cash conversion deserves close attention. Net cash generated from operating activities dropped to Rs11.43 billion from Rs78.76 billion. The largest swing was working capital: FY2025 benefited from a Rs52.80 billion working-capital inflow, while FY2026 saw a Rs4.22 billion outflow. Taxes paid also rose to Rs10.61 billion from Rs1.90 billion. This makes the operating-cash comparison unusually demanding, but it still shows that higher accounting profit did not translate into higher operating cash.

The cash picture is more balanced once investment distributions are included. The group received Rs43.92 billion of dividends from associates, joint ventures and an equity investment during FY2026, recorded in investing cash flows, compared with only Rs216 million in the prior year. Net investing cash flow consequently turned positive at Rs35.02 billion. Economically, this is important: as HUBCO becomes more dependent on associates and JVs for earnings, cash conversion increasingly depends on those entities actually distributing cash rather than merely reporting equity-accounted profit.

Balance sheet and liquidity

The balance sheet shows both deleveraging and new working-capital demands. Consolidated cash and bank balances fell 17.4% to Rs25.82 billion, while trade debts rose 12.0% to Rs32.43 billion and stock-in-trade more than doubled to Rs3.42 billion. Current assets were Rs94.55 billion against current liabilities of Rs66.72 billion, leaving current coverage above one but modestly below the prior year. At the same time, interest-bearing loans and borrowings declined materially, which is consistent with the lower finance-cost burden.

Long-term investments increased to Rs207.07 billion from Rs196.12 billion. That is consistent with the strategic direction: more of the group’s value and earnings capacity sits in investments and joint ventures, while the parent’s own generation revenue has disappeared. The analytical consequence is that consolidated earnings need to be read together with investee performance, dividend receipts and the financing requirements of new projects.

Power portfolio: the earnings engine has moved

The Hub Plant’s PPA was terminated effective October 1, 2024 under a negotiated settlement, years ahead of its original expiry. By March 2026 the company disclosed zero Hub Plant output for the nine-month period, compared with 15 GWh in the prior comparative period, and FY2026 full-year operating highlights likewise show zero output. This explains why parent-level revenue vanished and why comparing today’s HUBCO with its historical standalone generation profile can be misleading.

The replacement earnings engine is diversified but not risk-free. TEL and ThalNova are indigenous-coal plants whose combined load factor improved to 69% in FY2026, while CPHGC and Narowal also recorded higher load factors. Laraib’s load factor was stable at 48%. These assets have different fuels, contractual structures, ownership stakes and cash-distribution profiles. Diversification reduces dependence on the original Hub Plant, but it also makes group earnings more dependent on dispatch, receivables, partner economics and dividend decisions across multiple entities.

New businesses: optionality today, execution risk tomorrow

HUBCO is also allocating capital beyond power. Through Prime, it has expanded its oil-and-gas exploration footprint with two onshore blocks and interests in four offshore blocks. In mining, Ark Metals completed a first resource report that management says confirms promising mineral potential in Chaghi, while further studies remain necessary. These initiatives may broaden future earnings, but they are still development-stage or exploration-heavy and should not be treated as equivalent to mature power cash flows.

Electric mobility is the most visible growth project. The September briefing says the Gharo new-energy-vehicle assembly plant represents about US$150 million of investment, is designed for roughly 25,000 vehicles a year with scalability to 50,000, and targets commercial operations in the second half of 2026. The group had introduced five BYD models and HUBCO Green had 24 operational DC fast chargers by year-end. These milestones create a new earnings avenue, but the next result cycle should be watched for commissioning progress, capital requirements, localization economics and evidence of sustainable vehicle volumes rather than launch activity alone.

Recurring versus exceptional drivers

• Recurring or potentially recurring: earnings from operating power associates and joint ventures, dividends received from those entities, finance costs on the reduced debt base, generation availability and dispatch, and parent-level dividend income from subsidiaries.
• Structural reset rather than a repeatable loss: the early Hub Plant PPA termination permanently removed a major historical revenue stream. Its impact will remain embedded in year-on-year comparisons until the new portfolio base fully normalizes.
• Year-end/timing effect: the unusually low derived Q4 tax-and-levy charge materially amplified the June-quarter bottom line. Without a standalone company Q4 tax bridge, it should not be annualized.
• Development-stage drivers: EV assembly, charging infrastructure, oil-and-gas exploration and mining can alter the future earnings mix, but their capital intensity and execution risk mean current milestones should be separated from established recurring cash generation.

What changed versus the historical pattern

HUBCO’s historical parent-company model has changed fundamentally. The directors’ six-year table shows unconsolidated turnover falling from Rs62.54 billion in FY2022 to Rs44.52 billion in FY2023, Rs41.53 billion in FY2024, Rs13.21 billion in FY2025 and zero in FY2026. Yet unconsolidated profit rose to Rs24.47 billion in FY2026 because dividend income nearly doubled to Rs29.31 billion. At consolidated level, profit attributable to owners still increased. In practical terms, the group is now monetizing ownership stakes and portfolio cash flows rather than relying on the original plant’s tariff revenue.

This shift improves diversification but changes what investors should monitor. Revenue growth by itself is no longer the best summary statistic. The more important measures are associate/JV profit quality, actual dividends remitted to HUBCO, debt service, cash conversion, plant dispatch, and the capital absorbed by new businesses. FY2026 demonstrates the point: revenue and gross profit fell sharply, yet owner earnings increased and the board’s FY2026 dividend package, including the recommended final dividend, totaled Rs20 per share.

Key risks

• Associate and JV cash-conversion risk: equity-accounted profit only creates parent liquidity when investees can distribute cash. Receivable stress or financing covenants at project companies could slow that conversion.
• Power-sector and dispatch risk: output and distributions remain exposed to demand, dispatch, fuel availability, regulatory decisions and renegotiation of contractual terms.
• Capital-allocation risk: the EV plant, charging network, exploration blocks and mining initiatives can create growth, but they also require capital before their earnings profile is proven.
• Working-capital risk: trade debts increased, inventory rose sharply and FY2026 operating cash flow weakened, making receivable collection and cash conversion important next-cycle checks.
• Tax and below-the-line volatility: the derived Q4 result benefited from a very low net tax-and-levy burden, which may not repeat.

What to monitor next

First, watch whether associate and joint-venture earnings continue to grow and, equally important, whether that profit is paid upstream as dividends. FY2026’s Rs43.92 billion of investment distributions was a major source of group cash. The gap between equity-accounted profit and cash received will be a key quality measure from here.

Second, monitor finance costs and debt. HUBCO reduced loans and borrowings materially in FY2026 and finance costs fell 40%. If debt continues to decline, that can remain a recurring support to earnings; if new mobility or resource projects require substantial borrowing, part of that benefit could reverse.

Third, monitor generation and contractual economics across TEL, ThalNova, CPHGC, Laraib and Narowal. FY2026 operating data were generally constructive, especially at the Thar plants and CPHGC. Future dispatch, availability, receivables and distributions will determine whether the portfolio can compensate sustainably for the structural loss of Hub Plant revenue.

Finally, watch execution at the Gharo EV assembly plant and the pace at which new businesses move from capital deployment to earnings. FY2026 proved that HUBCO can produce higher shareholder earnings despite a much smaller consolidated revenue base. The next test is whether that portfolio model can deliver equally strong cash conversion while funding the group’s new growth platforms.

Sources

• The Hub Power Company Limited — official PSX financial-results filing for the audited year ended June 30, 2026, including consolidated and unconsolidated statements, cash flows and directors’ report. Open source.
• The Hub Power Company Limited — official unaudited third-quarter and nine-month financial statements to March 31, 2026, used for the Q4 derivation and Hub Plant operating disclosure. Open source.
• HUBCO — September 2026 analyst briefing, used for power-portfolio operating metrics, management’s FY2026 earnings bridge and updates on EV, oil and gas, mining and charging infrastructure. Open source.
• HUBCO Investor Relations — official index of FY2026 result notices, quarterly accounts and corporate briefing material. Open source.
• State Bank of Pakistan — 2026 policy-rate and money-market history, used to cross-check the interest-rate backdrop. Open source.
• Pakistan Stock Exchange — HUBC company page and public result/announcement record. Open source.
• Reuters — October 10, 2024 context on the government’s IPP contract-reset program and HUBCO’s premature PPA termination. Open source.