...PBT up 25.30% as positive cash denotes increased liquidity.
Geregu Power Plc, the first electricity company to be admitted into the main board of the Nigerian Exchange Limited (NGX), has continued to overcome macroeconomic headwinds as its nine months profit before tax soared to N17.48 billion *in the accounts released to the Nigerian Stock Exchange today* while a positive cash flow indicates increased liquid assets.
For the first nine months through September 2023, Geregu Power’s pre-tax profit spiked by 25.30 percent to N17.48 billion from N13.95 billion as at September 2022.
Revenue was up 42.92 percent to N55.74 billion in the period under review from N39 billion the previous year.
A breakdown of the revenue figure shows energy sold rose 40.45 percent to N34.79 billion from N24.77 billion, while capacity charge went up 47.32 percent to N20.95 billion.
Operating profit followed the same growth trajectory as it rose 24.09 percent to N19.88 billion from N16.02 billion.
Of course, investors have confidence in the firm’s growth prospects as its shares have gained 127.85 percent so far this year, outperforming the NGXASI index’s 31.42 percent, making it one of the best performers in the index.
The leading power generation company (Genco) in Nigeria has a healthy balance sheet as it has lowered its borrowing costs ahead of the central bank’s monetary policy meetings in which investors expect another rate hike in the face of sticky inflation.
Despite elevated borrowing costs on the back of an aggressive tightening cycle by the Apex bank, Geregu Power’s interest coverage ratio stood at 8.23 as at the first nine months of the year.
The interest coverage ratio is a measure of a company’s ability to repay its debts, with a ratio of at least 2 generally considered the minimum acceptable amount for a company with solid revenues. Analysts typically prefer a coverage ratio of 3 or higher.
Other positives from the financial statement is a 763.07 percent surge in net cash generated from operating activities to N37.57 billion, which gives the company the means to meet debt obligations, shell out for expenses, reinvest in business, endure downturns and finally return wealth to shareholders.