Transcorp Power Outperforms Gulf Energy, India Power in Key Metrics

Transcorp Power Plc (TPP) that listed its shares on the Nigeria Exchange Limited on Monday outperforms peer rivals in Europe, Middle East, and Africa, in key financial metrics, according to a recent report by Cardinal Stone Limited.

The report shows TPP has generated higher returns to shareholders than peer rivals while a very healthy balance-sheet and solid cash flow position makes its shares attractive to investors.

Transcorp Power is more efficient in the use of assets in the production process than peer rivals as its return on equity (ROE) of 64.10 percent as of December 2023 towers over, Gulf Energy Development Public Company (Gulf Energy) 14.30 percent, and India Power Corporation Limited (India Corp) 1.30 percent , according to data from Cardinal Stone.

Transcorp Power has a lower risk of default as its debt-t0-equity ratio of 49.20 percent for the year ended December 2023 is lower than Gulf Energy’s 197.70 percent

The company has the ability to reduce its debt than peer rivals-which validates a healthy balance sheet- as it has an interest coverage ratio of 4.1x, and that compares to Gulf Energy, 2.0x.

Despite the impact of naira depreciation on gas prices on energy cost and the hit of the devaluation bloated on gas payment in Naira terms, TPP generated earnings before interest depreciation, and amortisation (EBITDA) of margins of 48 percent that is higher than Gulf Energy, 20.10 percent, and Indian Power, 4.30 percent.

The company’s gross margin stood at 51.30 percent as at December 2023, and that compares with Gulf Energy, 19.30 percent, and Indian Power, 21.10 percent.

TPP recorded a Net income margin of 35.90 percent, and that compares to Gulf Energy, 13.0 percent, and India Power 2.50 percent.

The company currently accounts for 7.0 percent of Nigeria’s installed grid capacity but generates 10.0 percent of the country’s power needs, with its leadership position in the West African Power Pool (WAPP) and planned strategic alliances with DISCOs, eligible customers, and state governments leaving legroom for output growth in the near term.

Despite industry risk such as Naira devaluation, competition, unfavorable changes in interest rate, and higher trade receivables, analysts at Cardinal Stone have placed a Buy rating on the stock and target price of N323.40 and projected market capitalisation of N2.40 trillion.