Geregu Power Records Tepid Performance in Q1: Is It Time to Buy or Sell?
Geregu Power released its Q1 2025 financial performance results, revealing a moderate downturn in key performance metrics. The latest report, covering the half-year period, reflects both operational and structural pressures that may prompt investors to re-evaluate their positioning in the company amidst a volatile power sector landscape.
Geregu’s revenue experienced a significant year-on-year dip, declining from N50.43 billion in 2024 to N31.76 billion in the first half of 2025—a sharp contraction of nearly 37%. This steep fall suggests either a drop in generation capacity, reduced dispatch by the Transmission Company of Nigeria (TCN), or challenges with gas supply contracts, which have historically plagued Nigeria’s power sector.
Interestingly, cost of sales followed a similar, albeit less severe, downward trend—N19.76 billion in 2025 compared to N22.02 billion a year earlier. While the decline in operational costs provides some cushion, it is not significant enough to offset the revenue shortfall.
Administrative expenses inched upward to N2.53 billion from N2.15 billion, possibly a reflection of inflationary pressures and a more complex operating environment. This uptick, though marginal, adds further strain to the company’s margin, especially when juxtaposed against declining top-line figures.
However, there is a notable bright spot in the area of impairment reversal on financial assets, which moved from a negative N3.97 billion in 2024 to a positive N5.21 billion in the current reporting period. This reversal indicate successful recovery of previously doubtful receivables and improved financial risk management practices.
The weakened revenue numbers and rising expenses took a toll on operating profit, which plummeted to N14.67 billion from N21.77 billion in 2024. Consequently, finance income also reduced to N1.78 billion, down from N2.43 billion, due to reduced investment yields or lower cash reserves.
More concerning is the spike in finance costs, which climbed significantly, leading to a negative net finance cost of N1.66 billion, compared to N133.6 million in the previous period. The company’s rising borrowings—N14.97 billion in 2025 compared to N8.48 billion in 2024—explain this increased financial burden.
As a result, profit before tax (PBT) declined to N13.01 billion from N21.90 billion, while profit for the period fell to N10.43 billion—a 27.8% decrease from N14.46 billion recorded in 2024.
While Geregu’s total equity and liabilities rose from N243.47 billion to N262.99 billion, much of the growth came from increased borrowings and rising trade receivables, which surged from N121.82 billion to N147.64 billion. This signal delays in market settlements or the Nigerian Bulk Electricity Trading (NBET) entity’s ability to pay, a chronic issue for power generation firms in the country.
Trade and other payables also rose to N117.78 billion from N89.14 billion, indicating the company is leveraging supplier credit or deferring payments to balance cash flow. Meanwhile, retained earnings dipped to N40.53 billion from N51.34 billion, further illustrating pressure on profitability and shareholder value.
Earnings Per Share (EPS) fell to N4.17, down from N5.78 in the same period last year. At a current market price of N1,141.50 per share, the stock appears expensive with a trailing Price-to-Earnings (P/E) ratio of over 273x—a high multiple that may not be justified by the company’s current fundamentals.
While Geregu Power remains one of the most recognisable and strategically positioned players in Nigeria’s power sector, its Q1 2025 financials raise some red flags on its key operations areas.
Slumping revenues amidst sector-wide liquidity issues, rising finance costs and borrowings, strained profit margins, and a relatively high valuation with declining EPS
That said, the company’s success in improving its asset impairment outlook is commendable, and its long-term prospects benefit from reforms in Nigeria’s power sector, including recent privatisation drives and market liberalisation efforts.
Investor’s Recommendation: SELL (Short-Term)
Given the current valuation, declining profitability, and sectoral uncertainty, a “SELL” recommendation is prudent in the short term. However, investors must keep a close eye on regulatory developments and power sector reforms, which could revive Geregu’s long-term investment case.
Though, Geregu Power’s Q1 2025 performance underscores the fragility of Nigeria’s power generation business. While the company has shown resilience in managing its impairments and expanding its asset base, persistent macroeconomic and industry-specific headwinds demand a cautious approach from investors. The path to a more bullish outlook will depend heavily on tangible reforms in Nigeria’s power value chain and the company’s ability to reposition itself for sustainable growth. Kuda, SeerBit Partner to Enhance Seamless Online Transaction
