Verdict: FY2026 marks a genuine operating reset for Kot Addu Power Company. Revenue jumped more than twelvefold to Rs19.16 billion as commercial dispatch returned under the new 495 MW Tripartite Power Purchase Agreement, and the derived closing quarter was the strongest of the year with a positive gross margin. But the headline rebound is only half the story. Full-year gross profit was still slightly negative, profit after tax was almost unchanged at Rs2.52 billion because other income remained economically decisive, operating cash flow swung deeply negative, and KAPCO added substantial borrowing while committing capital to a major new investment. The next cycle will therefore be judged less on whether sales have returned and more on whether generation can produce sustainable gross profit and cash while the enlarged investment portfolio earns an adequate return.
Results at a glance
- Company Name: Kot Addu Power Company Limited
- Ticker: KAPCO
- Reporting period: year ended June 30, 2026. The September 11 PSX filing contains company-only annual financial statements for KAPCO. The five-page result package does not include an independent auditor’s report or state an audit opinion, so no audit-opinion wording is inferred here. The March 31, 2026 nine-month statements used for the Q4 bridge are explicitly unaudited; those interim notes also state that no consolidated financial statements were prepared because the dormant KAPCO Energy (Private) Limited share capital had not been subscribed.
- FY2026 revenue was Rs19.16 billion versus Rs1.56 billion, a 1,125.8% increase. The gross loss narrowed to Rs38.5 million from Rs438.2 million, profit before income tax rose 25.1% to Rs3.72 billion, while profit after tax slipped 0.6% to Rs2.52 billion. EPS was Rs2.86 versus Rs2.88.
- Derived Q4 FY2026, calculated as the official full year less the official unaudited nine months: revenue about Rs9.19 billion, gross profit Rs507.3 million and PAT about Rs1.01 billion. The comparable derived Q4 FY2025 had revenue of Rs1.56 billion, a gross loss of Rs438.2 million and PAT of Rs130.3 million. These are arithmetic residuals, not separately reported quarterly figures.
- Alpha QoQ Score: Not available
- TTM Performance Score: Not available
- 3Y Business Perf Score: 29.58
- Sector Leadership Score: 70.804
These four scores are AlphaGen model outputs, not company-reported figures.
What improved
1. The generation business moved from near-idle to commercially relevant again
The core change is contractual and operational, not merely accounting. CPPA’s FY2025 annual report records the signing of a 495 MW KAPCO Tripartite Power Purchase Agreement in June 2025. KAPCO’s own nine-month notes say the agreement became effective on September 13, 2025, was temporarily suspended from October 1, and was reinstated by NEPRA from December 9 after the system operator and network companies highlighted KAPCO’s role in congestion management, system stability and black-start capability.
That framework explains the dramatic revenue recovery. KAPCO disclosed 295,841 MWh of generation through March 2026. CPPA’s official April, May and June energy-purchase datasets also list KAPCO blocks in each month, corroborating continued Q4 dispatch. The five-page annual result does not provide a full-year MWh number, so this article does not infer an exact FY2026 volume.
The contrast with the recent past is stark. KAPCO’s FY2025 annual report showed only 53 GWh of net output and Rs1.56 billion of turnover, after zero turnover in FY2024. FY2026 therefore represents a structural return of the generation revenue stream rather than ordinary year-on-year growth from a normal base.
2. The closing quarter finally produced positive gross economics
The official annual-minus-nine-month bridge implies Q4 revenue of Rs9.19 billion, 61.3% above Q3 and 488.1% above the comparable Q4. More importantly, Q4 produced about Rs507.3 million of gross profit, a 5.5% gross margin. Q3 had only Rs8.2 million of gross profit, while Q4 FY2025 carried a Rs438.2 million gross loss. This is the cleanest evidence in the result that generation economics improved as the year progressed.
The improvement should still be interpreted cautiously. The annual package does not disclose Q4 output, heat rate, availability, fuel mix or capacity-payment detail. It is therefore reasonable to link the sales recovery to the reinstated TPPA and continued dispatch, but not to claim a specific volume, efficiency or tariff driver beyond what the official disclosures show.
3. A large legacy preservation cost disappeared
FY2025 included Rs2.27 billion of plant maintenance and preservation costs while the plant was largely outside normal commercial operation. That separate line was nil in FY2026. Its disappearance is an important reason the operating result improved even though the full-year gross margin remained slightly negative. Administrative expenses did rise 15.5% to Rs758.4 million, but other operating expenses almost halved to Rs232.4 million.
4. The investment portfolio started contributing a new earnings line
The FY2026 income statement includes Rs355.3 million as KAPCO’s share of net profit from an equity-accounted investment, versus nil a year earlier. The cash-flow statement separately records Rs20.91 billion invested in a joint venture during the year. An August 11 PSX disclosure identifies Attock Cement Pakistan Limited as an associated company in which KAPCO held around 46% of issued share capital. Taken together, these filings show that KAPCO is no longer only a power-plant earnings story; capital allocation into a large non-power associate has become financially material.
What weakened / needs attention
1. The full-year generation margin was still effectively at break-even
Despite the twelvefold revenue increase, cost of sales of Rs19.20 billion slightly exceeded revenue, leaving a Rs38.5 million gross loss and a negative 0.2% gross margin. The business therefore restored scale before it restored a meaningful full-year gross return. Q4’s positive margin is encouraging, but one quarter is not enough to establish the normalized economics of the reinstated contract.
Other income remained the main bridge from weak core margins to positive earnings. It was Rs4.87 billion in FY2026, down 31.1% from Rs7.07 billion last year, yet still larger than full-year profit before tax. Finance cost rose 47.7% to Rs366.9 million. PAT consequently stayed almost flat even as revenue changed completely. This is why the quality of future earnings depends on generation margins and cash conversion, not simply the top line.
2. Cash conversion deteriorated sharply
Net cash used in operating activities was Rs6.13 billion in FY2026 versus Rs2.61 billion generated in FY2025. Even before finance costs and taxes, operations used Rs2.40 billion of cash versus Rs6.33 billion generated a year earlier. By subtracting the nine-month cash flow from the full year, Q4 itself still used roughly Rs2.02 billion of operating cash despite producing about Rs1.01 billion of accounting profit.
Working capital helps explain the pressure. Trade debts closed at about Rs4.53 billion versus Rs1.88 billion a year earlier, an increase of roughly 141%. There was some late-year improvement: trade debts had been Rs6.68 billion at March 31. Stock-in-trade also fell 32.2% year on year to Rs5.23 billion, although it rose modestly from March. The next quarter needs to show whether receivable collection can turn the restored revenue base into cash.
3. Leverage returned in a major way
At June 2026 KAPCO reported Rs8.72 billion of long-term borrowings, Rs4.59 billion of current maturities and Rs7.91 billion of secured short-term mark-up financing — about Rs21.22 billion in aggregate borrowing lines that were nil in the June 2025 statement. The cash-flow statement shows Rs13.15 billion of new long-term borrowing during the year. Current liabilities more than doubled to Rs18.20 billion from Rs7.87 billion.
This leverage should be viewed alongside capital allocation. KAPCO invested Rs20.91 billion in a joint venture and increased a long-term deposit by Rs13.82 billion. Those are strategic balance-sheet moves rather than routine generation capex; fixed-capital expenditure itself was only Rs33.1 million. The company is effectively exchanging part of its formerly liquid investment profile for a mix of strategic equity exposure and higher financial leverage.
4. Tax absorbed more of the improved pre-tax result
Profit before income tax rose to Rs3.72 billion from Rs2.97 billion, but income-tax expense increased to Rs1.20 billion from Rs436.9 million, while minimum and final taxes rose to Rs109.5 million from Rs22.1 million. The higher tax charge more than offset the pre-tax improvement at the bottom line, leaving PAT almost unchanged.
Recurring versus exceptional: what should carry forward?
The most important recurring change is the reinstated generation framework. NEPRA’s review decision records the TPPA becoming effective in September 2025 and the later tariff reinstatement after the initial suspension. NEPRA also issued fuel-price adjustments for KAPCO during 2026, confirming an active tariff mechanism for dispatched energy. As long as the contract and system requirement remain in force, power sales should remain structurally more relevant than in FY2024-FY2025.
What should not be extrapolated mechanically is the exact level of other income, the Rs355.3 million equity-accounted profit contribution, the timing of investment returns, or Q4’s specific tax and finance mix. The five-page annual result package does not contain the detailed annual notes for these lines. Likewise, FY2025’s Rs2.27 billion preservation cost was linked to a different operating state and its absence is a year-on-year benefit, not a new revenue stream.
Historical pattern: the earnings model has changed
KAPCO’s recent history is unusually discontinuous. FY2024 had no turnover; FY2025 had only Rs1.56 billion of turnover and 53 GWh of net output; FY2026 restored Rs19.16 billion of revenue under a new contractual framework. At the same time, the company deployed tens of billions of rupees into strategic investments and borrowings reappeared on the balance sheet. Comparing FY2026 with the prior two years therefore requires more than a simple growth rate: KAPCO has moved from a largely idle plant plus financial-income model toward a hybrid of power generation and material associate investment exposure.
Dividend and capital allocation
PSX’s official financial-results announcement shows a final cash dividend of 15%, equivalent to Rs1.50 per share. The annual statement of changes in equity also records an FY2026 interim dividend of Rs1.50 per share, so total declared distribution for the year is Rs3.00 per share. Cash dividends paid during the year were Rs3.50 billion. That payout is materially lower than the prior year’s distribution and is consistent with a year in which KAPCO committed substantial capital to new investments and added debt.
What to monitor next
- Generation and gross margin: Q4’s derived 5.5% gross margin was a major improvement, but Q1 FY2027 needs to show that positive gross economics persist rather than reverse with dispatch, fuel mix or tariff timing.
- Dispatch and regulatory continuity: monitor KAPCO’s MWh, TPPA status, IGCEP/PAP treatment and NEPRA tariff or fuel-adjustment decisions. The plant’s economic value depends on both system need and the contractual framework.
- Receivables and operating cash flow: the year ended with much higher trade debt and negative operating cash flow. Continued collection after the March peak is essential to validate earnings quality.
- Borrowing and finance cost: KAPCO ended FY2026 with roughly Rs21.22 billion across long-term, current-maturity and short-term financing lines. Watch whether these balances fall after the major investment outlays or become a persistent drag.
- Attock Cement contribution and strategy: the new associated-company exposure is now large enough to affect KAPCO’s earnings, cash allocation and risk profile. The August disclosure also said Attock Cement was evaluating a potential merger with Fauji Cement, making subsequent corporate actions relevant to KAPCO.
- Other income and tax composition: the full annual report should clarify the detailed sources of Rs4.87 billion of other income, the equity-accounted investment notes and the higher tax charge before those lines are treated as recurring.
Verdict in one line
KAPCO has successfully restored a meaningful power-sales engine and ended FY2026 with a much healthier closing-quarter gross margin, but the next proof point is cash-backed generation profitability because leverage, strategic investment and dependence on non-core income have all become more important.
Sources
- Pakistan Stock Exchange — KAPCO FY2026 financial-results package, used for the full-year income statement, financial position, cash flow, changes in equity and annual reporting period. Open source.
- KAPCO — official unaudited nine-month report to March 31, 2026, used for the Q4 arithmetic bridge, TPPA chronology, nine-month generation, interim cash flow and working-capital comparison. Open source.
- Pakistan Stock Exchange — KAPCO issuer page and official financial announcements, used to verify company identity, filing dates, FY2026 headline results and final dividend. Open source.
- Central Power Purchasing Agency — Annual Report 2025, used to verify the 495 MW KAPCO TPPA and its June 2025 signing in the power-procurement record. Open source.
- NEPRA — decision on KAPCO’s review petition, used for the TPPA effective date, suspension/reinstatement context, system-need rationale and treatment of capacity payment during suspension. Open source.
- Central Power Purchasing Agency — FY2025-26 XWDISCO energy-purchase data, used to corroborate continued KAPCO dispatch in April, May and June 2026. Open source.
- Pakistan Stock Exchange — KAPCO material information dated August 11, 2026, used for the disclosure that Attock Cement was an associated company in which KAPCO held around 46% and for the subsequent merger-feasibility development. Open source.
- KAPCO — Annual Report 2025, used for historical net output, turnover and the comparison with the pre-TPPA operating state. Open source.