PACRA Maintains the Entity Ratings of The Hub Power Company Limited

The ratings reflect Hub Power Company’s strong business profile as a diversified conglomerate, with its primary focus on the energy sector. Its strategic investments span across Pakistan’s power generation, mining, upstream energy, and emerging EV mobility sectors. The Company maintains a significant presence in the domestic energy market through investments in Narowal Energy Limited, Laraib Energy Limited, China Power Hub Generation Company, Thar Energy Limited, and ThalNova Power Thar (Private) Limited. Operationally, HUBCO benefits from integrated support through its wholly owned subsidiary, Hub Power Services Limited, which provides operations and maintenance (O&M) services for the group’s power assets. The Company also holds a 49% stake in China Power Hub Operating Company (Private) Limited. In addition, HUBCO maintains an 8% equity interest in SECMC. HPHL owns a 50% stake in Prime International Oil & Gas Company, which acquired ENI Pakistan’s upstream assets and currently produces approximately 602 MMscfd. HUBCO has also entered Pakistan’s electric vehicle (EV) sector through Mega Motor Company Limited in collaboration with BYD. The first locally assembled BYD vehicle is anticipated by Q4FY26 following financial close achieved in January 2026. Additionally, HUBCO Green (Private) Limited was established to develop a nationwide EV charging network. Financially, HUBCO sustained a stable profitability profile during 1HFY26. The Company reported an unconsolidated net profit of PKR 14.64bln (1HFY25: PKR 13.60bln), while consolidated profitability stood at PKR 25.62bln during 1HFY26 (1HFY25: PKR 26.44bln). The year-on-year decline in profitability primarily reflects the termination of the base power plant operations, which resulted in lower revenue contribution during the period. However, following the achievement of Project Completion Date (PCD), both TEL and TN declared and distributed maiden dividends during 1HFY26, while continued dividend flows from TEL, TN, along with sustained payouts from China Power Hub Generation Company, are expected to provide income visibility and support cash flow stability going forward. The Company’s financial risk profile strengthened considerably following significant deleveraging, primarily supported by one-time liquidity received from the power purchaser against the termination of the base power plant. Total borrowings declined from PKR 41.53bln in FY24 to PKR 4.20bln as of Jun-25, and further to PKR 2.40bln by Dec-25, resulting in leverage improvement to 3.3% from 36.0% in Jun-24. Going forward, the Group’s planned investment in the EV segment has achieved financial close and is expected to entail a material increase in group-level leverage. Additionally, management is also evaluating options for the utilization of the former base power plant and its associated land for alternative commercial ventures. While the leverage implications of these initiatives are yet to be finalized, they are expected to be significant and will remain an important consideration in assessing the Group’s evolving financial risk profile.
The assigned ratings incorporate Hub Power Company’s long-standing operational presence, sound financial position, and diversified strategic investments. Although the expiry of the base plant PPA and the conversion of NEL to hybrid tariff structures may weigh on future earnings, the Company’s expansion into mining and the automotive sector is expected to strengthen business diversification over the medium term. Going forward, the ratings will remain linked to the effective execution of these ventures over the medium term, along with continuity of dividend streams from subsidiaries and associates, and disciplined management of expansion-related borrowings.

About the Entity
Hub Power Company (PSX: HUBC), incorporated in 1991, was previously Pakistan’s largest Independent Power Producer (IPP) and currently operates a diversified power generation portfolio of 2,289 MW. The Company has a broad-based shareholding structure, with Mega Conglomerate (Private) Limited holding 19.48%, while associated companies and related parties collectively hold 20.36%.