Last Update 12 Nov 25
Transcorp Power Plc 9M 2025 – Strong Profit Growth Driven by Operational Efficiency and Strategic Investments
Executive Summary
Transcorp Power Plc delivered a robust performance for the nine months ended 30 September 2025, with revenues increasing by 38% YoY to ₦308.54 billion (from ₦223.56 billion in 9M 2024), reflecting higher electricity generation and improved contractual operations. Gross profit rose 24% YoY to ₦119.67 billion, supported by cost optimization initiatives and efficient management of cost of sales.
Operating profit reached ₦94.05 billion, up from ₦80.58 billion in the prior period, despite higher administrative expenses and an increase in impairment charges to ₦7.69 billion. Finance costs remained elevated at ₦8.65 billion, partially offset by finance income of ₦3.98 billion and foreign exchange gains of ₦1.69 billion. Profit before tax improved 12.4% YoY to ₦91.18 billion, while profit after tax rose 17% YoY to ₦68.42 billion. Total comprehensive income, which includes fair value gains on equity investments of ₦2.62 billion, was ₦71.05 billion, reflecting both strong operational performance and investment appreciation. Basic and diluted earnings per share rose to ₦9.12, from ₦7.79 in 9M 2024.
Financial Highlights – Statement of Profit or Loss
₦’000
9M 2025
9M 2024
YoY Change
Revenue
308,540,802
223,556,414
+38%
Cost of Sales
188,872,363
127,093,172
+49%
Gross Profit
119,668,439
96,463,242
+24%
Administrative Expenses
17,929,720
11,605,816
+54%
Operating Profit
94,049,583
80,582,949
+16.6%
Finance Income
3,976,205
4,880,192
–18.5%
Finance Cost
8,646,250
7,916,184
+9.2%
Foreign Exchange Gain
1,689,516
3,574,365
–52.7%
Profit Before Tax
91,176,197
81,121,322
+12.4%
Profit After Tax
68,424,412
58,421,049
+17.0%
Total Comprehensive Income
71,046,644
58,421,049
+21.6%
EPS (₦)
9.12
7.79
+17%
Interpretation:
- Revenue growth was primarily driven by higher generation output and improved operational efficiency.
- Cost of sales increased due to rising fuel costs, but gross margin improved due to disciplined cost management.
- Foreign exchange gains moderated compared to prior year, reflecting lower FX volatility in the period.
- Investment gains contributed positively to total comprehensive income.
Balance Sheet Overview
₦’000
30-Sep-2025
31-Dec-2024
Change
Total Assets
536,703,056
396,782,267
+35.3%
Non-Current Assets
93,690,861
87,691,017
+6.8%
Current Assets
443,012,195
309,091,250
+43.3%
Inventories
3,224,924
2,367,501
+36.2%
Trade & Other Receivables
432,148,858
298,388,501
+44.8%
Cash & Cash Equivalents
7,638,413
8,335,248
–8.4%
Total Liabilities
376,530,799
270,156,653
+39.3%
Non-Current Liabilities
38,540,177
40,347,503
–4.5%
Current Liabilities
337,990,622
229,809,150
+47.0%
Total Equity
160,172,258
126,625,614
+26.5%
Retained Earnings
109,415,007
78,490,595
+39.4%
Interpretation:
- Strong asset growth driven by higher receivables and current assets reflecting operational expansion.
- Equity increased 26.5%, underpinned by retained earnings growth and revaluation gains.
- Liabilities grew in line with operational scale, but non-current borrowings remained stable.
- Cash levels remained relatively stable despite increased working capital requirements.
Operational Highlights
- Revenue Growth: Driven by improved plant availability and contractual billing.
- Cost Management: Administrative and operational efficiencies supported margin expansion.
- Investment Gains: Fair value gains on equity investments contributed positively to total comprehensive income.
- Financial Stability: Equity growth and stable borrowings underpin balance sheet strength.
Strengths
- Robust top-line growth and strong profitability.
- Significant contribution from investment income enhances earnings quality.
- Healthy balance sheet with growing equity base.
Weaknesses
- Current liabilities grew significantly, reflecting working capital needs.
- Cash levels slightly declined despite higher operations.
- FX exposure remains a risk factor for foreign-denominated costs.
Outlook
Transcorp Power Plc is positioned for continued growth in FY 2025, supported by higher electricity demand, contractual expansions, and strategic investments. Management focus on operational efficiency, cost discipline, and receivables management will further sustain profitability and balance sheet strength.
Analyst View
“Transcorp Power Plc’s performance highlights resilience in revenue generation and operational control. Strong gross margins, robust profit growth, and revaluation gains on investments reinforce the Company’s sustainable earnings trajectory, while maintaining a solid capital base to support future expansions.”
Transcorp Power Plc continues to demonstrate strong operational resilience and profit growth momentum in FY2025, driven by robust revenue expansion, disciplined cost management, and improving energy generation capacity. For the nine-month period ended September 2025, revenue increased 38% YoY to ₦308.5 billion, supported by higher energy dispatch levels and efficiency gains from generation assets.
The company’s earnings quality remained solid, with profit after tax rising 17% YoY to ₦68.4 billion, translating to an impressive earnings per share (EPS) of ₦9.12, up from ₦7.79 in the prior year. However, liquidity pressures are emerging from working capital build-up, which weighed on cash conversion despite the firm’s strong profitability.
Transcorp Power’s fundamentals remain robust, and its position as one of Nigeria’s largest power generation companies provides a solid platform for sustainable growth. Yet, exposure to receivable delays from the Nigerian Bulk Electricity Trading (NBET) company and rising operational costs could temper near-term free cash flow generation.
Financial Performance Overview
Revenue and Operating Efficiency
Revenue grew by ₦84.98 billion (+38%) YoY to ₦308.5 billion, underscoring stronger generation performance and improved energy dispatch under the Transitional Electricity Market framework.
Cost of sales rose 49% YoY to ₦188.9 billion, reflecting higher gas and maintenance costs due to increased production volumes. Nevertheless, the company maintained a gross profit margin of 38.8% (2024: 43.1%), demonstrating resilient cost control in a volatile energy environment.
Operating Profit
Administrative expenses increased by 54% to ₦17.9 billion due to inflationary pressures, but this was offset by higher revenue. Consequently, operating profit rose 17% YoY to ₦94.05 billion, yielding an EBIT margin of 30.5%, a testament to strong cost discipline and scale efficiency.
Profitability and Earnings Quality
Finance costs increased modestly to ₦8.65 billion (+9%), while finance income fell 19% to ₦3.98 billion due to lower interest-bearing asset balances. Despite these headwinds, Profit Before Tax (PBT) grew 12.4% YoY to ₦91.2 billion.
After accounting for an income tax expense of ₦22.75 billion, Net Profit stood at ₦68.42 billion, translating to a net margin of 22.2% (2024: 26.1%).
The company recorded a fair value gain on equity investments of ₦2.62 billion, resulting in Total Comprehensive Income of ₦71.05 billion — a notable improvement from ₦58.4 billion last year.
Cash Flow and Liquidity Analysis
Operating Activities
Despite strong earnings, operating cash flow (CFO) stood at ₦57.8 billion (vs ₦39.6 billion in 2024), constrained by significant increases in trade receivables (₦133.8 billion). This reflects the persistent receivable collection delays from NBET and other counterparties within the power value chain.
Investing Activities
The company spent ₦2.25 billion on capital expenditure (CapEx) for plant upgrades and invested ₦7.9 billion in short-term securities, leading to a net investing cash outflow of ₦10.0 billion.
Financing Activities
Dividend payments (₦37.5 billion) and debt repayments led to a net cash outflow of ₦49.0 billion from financing activities. Overall, cash and cash equivalents declined slightly to ₦7.64 billion (Dec 2024: ₦8.33 billion), indicating tight liquidity despite robust operating performance.
Balance Sheet and Capital Structure
Transcorp Power maintains a balanced capital structure, with debt funding growth while sustaining a healthy interest coverage ratio. The company’s finance cost-to-EBIT ratio remains low (9.2%), reflecting strong debt-servicing capacity.
However, the rising trade receivables (₦133.8 billion YoY increase) have constrained free cash flow generation and could pressure short-term liquidity if not actively managed. Dividend payout remains consistent with prior years, highlighting management’s confidence in future earnings stability.
Strengths
- Dominant Generation Capacity: One of Nigeria’s largest power producers, benefiting from economies of scale and government supply contracts.
- Strong Revenue Growth: Sustained demand and stable tariff structures under long-term contracts.
- Operational Efficiency: Improved cost management and plant utilization.
- Healthy Profitability: 22% net margin and consistent earnings growth.
- Solid Dividend Record: Demonstrates shareholder value commitment.
Weaknesses / Risks
- Receivable Risk: Large outstanding trade receivables limit cash generation.
- Liquidity Tightness: Working capital pressures reducing cash balances.
- Regulatory Exposure: Dependence on NBET and government policy frameworks in Nigeria’s power sector.
- High Tax Expense: Effective tax rate (~25%) constrains net earnings scalability.
- Foreign Exchange Volatility: Moderate exposure to FX fluctuations on imported equipment and servicing obligations.
Outlook and Strategic Direction
The outlook for Transcorp Power remains positive, supported by:
- Increased energy generation capacity through planned plant upgrades.
- Ongoing debt optimization and strong credit profile to support expansion.
- Expected improvement in receivable collections as NBET liquidity stabilizes.
However, working capital management remains a key execution risk. The company’s medium-term growth will rely on efficiency gains, improved receivable turnover, and possible participation in power distribution reforms to capture downstream value.
Valuation View
Transcorp Power’s earnings trajectory and consistent dividend payout justify a favorable outlook in the medium term. Given the company’s robust margins and recurring cash flow potential, valuation multiples (P/E ~27x for sector based on annualized 2025 EPS) remain attractive relative to regional peers. Hence we have a Fair Value of N328.32 and the current market Price of N314
However, the near-term cash conversion constraints and sectoral regulatory uncertainty warrant a moderately conservative stance until liquidity metrics improve.
Investment Rating: BUY (Long-Term Growth Bias)
Strong earnings growth and strategic positioning in Nigeria’s power sector justify long-term accumulation despite short-term liquidity constraints.
Have other thoughts on Transcorp Power?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeHow well do narratives help inform your perspective?
Disclaimer
The user Wane_Investment_House has a position in NGSE:TRANSPOWER. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.