Lucky Electric Power Company Limited - PPSTS-23 - PKR 6.0bln - TBI

RATING REPORT | Mar-26

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
16-Mar-26 AA A1+ Stable Preliminary -
About the Instrument

Lucky Electric Power Company Limited (LEPCL) is in the process of issuing a rated, unsecured, unlisted, privately placed Short-Term Sukuk, PPSTS-23, amounting to PKR 6,000 million, inclusive of a green shoe option of PKR 2,000 million, in March 2026. The Sukuk will have a maturity date of 17 September 2026 and is being issued to meet the Company’s working capital requirements. The instrument will carry a profit rate of 3-Month KIBOR minus 10 basis points, with both profit and principal payable at maturity.

Rating Rationale

Lucky Electric Power Company Limited ("LEPCL" or "the Company") has set up a 1x660MW (gross) coal-fired power plant. The project achieved COD in March 2022 and is successfully connected to and providing electricity to the grid. The primary fuel is coal; a coal supply agreement is signed with Sindh Engro Coal Mining Company (SECMC). SECMC will provide coal from its developing Block-II, with expansion up to 13.1 million tons per annum in three phases. The Company has signed an imported coal supply agreement with reputable coal suppliers from Indonesia. Currently, the plant is generating electricity through imported coal. The Company generated a topline of PKR 70,080 million during FY25 and a bottom line of PKR 20,707 million during the same period. Comfort is drawn from the experience of the O&M contractor, M/s Harbin Electric International Co., Ltd. - P.R. China (HEI), which has taken over the plant from the previous operator effective from March 2023. Going forward, the Company's main focus would be to keep the plant operational. As of June 30, 2025, the Company had total borrowings of PKR 124,753 million, including short-term borrowings of PKR 17,790 million. The Company has a history of issuing Sukuks to meet its short-term capital requirements. While multiple Sukuks were often issued simultaneously in the past, the Company now typically maintains only one Sukuk outstanding at a time. In continuation of this strategy, it is currently in the process of issuing a PKR 6,000 million Sukuk.

Key Rating Drivers

The financial strength and extensive experience in the energy value chain of the sponsoring company, Lucky Cement, remain key positives for the ratings. However, LEPCL continues to navigate working capital pressures arising from the significant devaluation of the PKR, supply chain disruptions, and tariff adjustments. The Company's power offtake agreement with CPPA-G provides revenue stability, as capacity payments are guaranteed under the contract upon plant availability, even in the absence of a purchase order. Furthermore, the Government of Pakistan has provided a payment guarantee against dues from CPPA-G, offering additional credit protection.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Lucky Electric Power Company Limited - PPSTS-23 - PKR 6.0bln - TBI


Rating Analysis

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Issuer Profile
Profile

Lucky Electric Power Company Limited (Lucky Electric) has set up a 1x660MW (gross) local coal-fired supercritical power plant at Port Qasim, Karachi, Sindh. The plant is developed on a Build-Own-Operate (“BOO”) basis with an initial estimated cost of USD 895 Million in a debt-to-equity ratio of 75:25. The tariff is divided into two components: Capacity Payments (PKR 10.3204/ KWh) and Energy Payments. Energy payments further have two components: variable costs (PKR 0.3777/ KWh) and fixed fuel costs (PKR 13.4690/KWh). If the Plant is operational at contract availability, capacity payments and the fixed fuel costs will be provided even if no purchase order is placed by CPPA-G. The tariff control period is 30 years. The PKR/KWh Return on Equity (ROE) of Lucky Electric, as agreed with NEPRA, is 29.5%.


Ownership

Lucky Cement Limited owns 100% shareholding of Lucky Electric, incorporated in Pakistan on June 13, 2014, as a public unlisted company. The registered office of the company is situated at 6-A, Muhammad Ali Housing Society, Karachi, Sindh. Lucky Electric is a subsidiary of Yunus Brothers Group (YBG). YBG is one of the biggest conglomerates in Pakistan with diversified interests in textiles, real estate, power generation, chemicals, food, and automotive. Lucky Cement Limited stands as the flagship company of YBG. Lucky Cement is one of the largest producers and leading exporters of quality cement in Pakistan. The company’s sponsors have the ability to support the entity both on a continuing basis and in times of crisis. Additionally, the financial strength of sponsors is considered strong as the sponsors have well-diversified profitable businesses.


Governance

The Board of Directors is primarily dominated by the sponsor's representatives. The Company's Board of Directors comprises eight members, including the Chief Executive Officer. All Board members represent Lucky Cement Limited. Mr. Muhammad Ali Tabba, the Chairman, has been associated with the Group in different capacities for nearly three decades and currently chairs the Board with his visionary leadership and vast experience. All Board members are highly qualified and competent enough for effective leadership. Board members meet quarterly or conduct regular discussions on a need basis. The Chairman of the Board exercises close oversight over the affairs of the Company. However, there are no sub-committees. The Board has been actively involved in providing strategic guidance to the Company. There were previously no independent directors; however, Ms. Zeeba Ansar was appointed as an Independent Director on August 19, 2025. A.F. Ferguson & CO., Chartered Accountants, is the external auditor of the Company. They have expressed an unqualified opinion on the Company's financial statements at end-Jun-25.


Management

Lucky Electric's management team comprises qualified professionals in areas like technical, commercial, and legal specialists with the capability to construct, develop, operate, finance, and maintain the project. The Company has a well-defined organizational structure with the CEO reporting to the Board. Mr. Ruhail Muhammad, the CEO, is an MBA and CFA Charter holder. Mr. Ruhail carries vast experience in leading various corporate organizations and is also on the board of various renowned corporate entities. He is supported by an experienced team of professionals. Over the years since incorporation, management has played a significant role in empowering the organization through its progressive results and achieving project milestones in a timely and accurate manner. The Company takes advantage of advanced I.T. solutions to deliver comparatively better on many fronts. Moreover, Lucky Electric's quality of the I.T. infrastructure and the breadth and depth of activities performed have remained satisfactory


Business Risk

The electricity generated is sold to the Central Power Purchasing Agency (CPPA-G) under a 30-year Power Purchase Agreement (PPA). The Revised Commercial Operation Date (RCOD) as per the PPA was March 1, 2021. However, the Company achieved Commercial Operation Date (COD) on March 21, 2022, owing to the global pandemic of the Novel Coronavirus. The Company has entered into a 7-year Operation & Maintenance (O&M) contract with M/s Harbin Electric International Co., Ltd., P.R. China (HEI), effective from March 2023. The project's revenues and cash flows are primarily dependent on maintaining the plant's operational availability and capacity factors at adequate levels. Lucky Electric's Coal Supply Agreement (CSA) is with SECMC, which is expanding its coal mine in Thar Block-II to 13.1 million tons per annum in three phases. The Company has an imported coal supply agreement from Indonesia. The plant runs on imported coal due to the unavailability of Thar coal. Lucky Electric has obtained various types of insurance to cover its operational and business risks. Total electricity generated in the country during FY25 amounted to 127,160 GWh. This is a decline from FY24's 138,029 GWh (and FY23's 154,056 GWh). The decline in generation/consumption is attributed to reduced economic activity, a slowdown in industrial and commercial operations, high electricity tariffs impacting household and overall patterns, increased reliance on off-grid solar solutions, energy conservation measures, and weak industrial demand. As of December 31, 2025, Pakistan's total installed power generation capacity in the national grid stood at approximately 46,605 MW. LEPCL reported revenues of PKR 70,080 million during FY25 (FY24: PKR 90,954 million). The Company incurred a finance cost of PKR 21,513 million in FY25 (FY24: PKR 31,302 million), reporting a profit of PKR 20,707 million (FY24: PKR 19,533 million). The contractually agreed availability for the plant over the 30-year term is set at 85%. If these aren't met, Lucky Electric would be charged LDs by the Power Purchaser


Financial Risk

Lucky Electric's capital structure comprises 25% equity and 75% debt financing of the initial project cost of USD 895 million. Local facilities of PKR 65.9 billion, with a 10-year tenure repayable in 40 quarterly installments, had PKR 9.24 billion (14%) repaid as of June 30, 2025. The foreign facility of USD 210 million (USD 20 million quarterly, USD 190 million semi-annually) has seen overall repayment of approximately 26%. The Company manages working capital through internal cash flows and short-term borrowings due to delayed payments from the power purchaser. Receivables stood at PKR 19,386 million as of June 30, 2025 (June 30, 2024: PKR 33,604 million), further declining to PKR 16,371 million by December 31, 2025. Short-term borrowings were PKR 17,790 million as of June 30, 2025 (June 30, 2024: PKR 40,450 million), increasing to PKR 20,592 million by December 31, 2025. The Company generated FCFO of PKR 47,247 million for FY25 (FY24: PKR 55,812 million) and PKR 20,931 million for 1HFY26. Interest coverage stood at 2.7x as of December 31, 2025 (June 30, 2025: 2.3x), with debt coverage at 1.6x. As of June 30, 2025, the debt-to-equity ratio was 65.1%, with total debt of PKR 124,753 million and equity of PKR 66,552 million.


Instrument Rating Considerations
About the Instrument

Lucky Electric Power Company Limited (LEPCL) is in the process of issuing a rated, unsecured, unlisted, privately placed Short-Term Sukuk, PPSTS-23, amounting to PKR 6,000 million, inclusive of a green shoe option of PKR 2,000 million, in March 2026. The Sukuk will have a maturity date of 17 September 2026 and is being issued to meet the Company’s working capital requirements. The instrument will carry a profit rate of 3-Month KIBOR minus 10 basis points, with both profit and principal payable at maturity.


Relative Seniority/Subordination of Instrument

Although unsecured, in the hierarchy of creditors, the investors shall rank after the secured lenders/investors of the Company.


Credit Enhancement

The instrument is unsecured.
 
 

Mar-26

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Lucky Electric Power Company Limited - PPSTS-23 - PKR 6.0bln - TBI


Financial Summary

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(PKR mln)


 Dec-25
6M		 Jun-25
12M		 Jun-24
12M		 Jun-23
12M
A. BALANCE SHEET
1. Non-Current Assets 132,846 135,697 139,409 146,974
2. Investments 0 0 0 0
3. Related Party Exposure 0 0 0 0
4. Current Assets 66,769 66,511 79,554 76,150
a. Inventories 5,073 4,738 11,612 9,227
b. Trade Receivables 39,605 19,386 33,604 30,859
5. Total Assets 199,615 202,208 218,963 223,123
6. Current Liabilities 6,544 11,502 13,337 23,069
a. Trade Payables 1,866 3,559 6,078 8,221
7. Borrowings 121,813 124,005 153,675 161,659
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 85 149 124 116
10. Net Assets 71,172 66,552 51,827 38,279
11. Shareholders' Equity 71,172 66,552 51,827 38,279
B. INCOME STATEMENT
1. Sales 34,490 70,080 90,954 98,280
a. Cost of Good Sold (15,605) (27,246) (39,511) (62,126)
2. Gross Profit 18,885 42,835 51,443 36,154
a. Operating Expenses (441) (681) (737) (545)
3. Operating Profit 18,444 42,153 50,706 35,609
a. Non Operating Income or (Expense) 30 94 169 74
4. Profit or (Loss) before Interest and Tax 18,474 42,247 50,875 35,683
a. Total Finance Cost (7,865) (21,513) (31,302) (26,231)
b. Taxation (9) (27) (40) (62)
6. Net Income Or (Loss) 10,600 20,707 19,533 9,390
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 20,931 47,247 55,812 40,446
b. Net Cash from Operating Activities before Working Capital Changes 12,897 24,749 24,429 16,387
c. Changes in Working Capital (3,495) 12,198 (17,976) (11,708)
1. Net Cash provided by Operating Activities 9,402 36,947 6,453 4,679
2. Net Cash (Used in) or Available From Investing Activities (247) (327) (783) (1,082)
3. Net Cash (Used in) or Available From Financing Activities (7,661) (36,725) (12,480) 1,774
4. Net Cash generated or (Used) during the period 1,495 (106) (6,810) 5,371
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -1.6% -22.9% -7.5% 278.7%
b. Gross Profit Margin 54.8% 61.1% 56.6% 36.8%
c. Net Profit Margin 30.7% 29.5% 21.5% 9.6%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 50.6% 84.8% 41.6% 29.2%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 29.6% 29.9% 37.3% 26.8%
2. Working Capital Management
a. Gross Working Capital (Average Days) 182 181 171 132
b. Net Working Capital (Average Days) 168 155 142 101
c. Current Ratio (Current Assets / Current Liabilities) 10.2 5.8 6.0 3.3
3. Coverages
a. EBITDA / Finance Cost 2.7 2.3 1.8 1.6
b. FCFO / Finance Cost+CMLTB+Excess STB 1.6 1.6 1.4 1.2
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 3.9 3.9 5.5 10.0
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 63.1% 65.1% 74.8% 80.9%
b. Interest or Markup Payable (Days) 44.1 38.3 38.8 51.9
c. Entity Average Borrowing Rate 12.4% 15.0% 19.4% 16.5%

Mar-26

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Lucky Electric Power Company Limited - PPSTS-23 - PKR 6.0bln - TBI


Rating Scale

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Mar-26

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Lucky Electric Power Company Limited - PPSTS-23 - PKR 6.0bln - TBI


regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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  3. Conduct of Business
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    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
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Mar-26

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Lucky Electric Power Company Limited - PPSTS-23 - PKR 6.0bln - TBI


Regulatory & Supplementary Disclosure

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Nature of Instrument Size of Issue (PKR) Tenor Security Quantum of Security Trustee Book Value of Total Assets (PKR)
Privately Placed Short Term Sukuk (PPSTS- 23) 6,000 million 6 months Unsecured N/A Habib Bank Limited N/A
Name of Issuer Lucky Electric Power Company Limited
Issue Date Mar, 2026
Maturity Sep, 2026
Option 3M KIBOR -10bps p.a.
Due Date Opening Principal Principal Repayment* Due Date Markup/ Profit* Markup/Profit rate 3M Kibor Minus 10bps Markup/Profit Payment Installment Payable Principal Outstanding

PKR in mlnPKR in mln

March, 2026 6,000 0 17-Sep-26 3M KIBOR -10bps 0 6,000
Sep, 2026 6,000 6,000 6,054.15 0
6,000 6,054.15
Note: The first profit payment (3M Kibor 10.93-10bps = 10.83% *6000= 54.15) will be due at the end of the six month period from the Issue Date. Profit will be calculated based on the applicable Profit Benchmark, using a 365-day year (or 366 days in a leap year) for the outstanding balance of the Facility Amount.

Mar-26

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