Arun Kabeli Power Limited (AKPL) has reported a sharp decline in profitability for the fourth quarter of the last fiscal year with rising expenses offsetting a slight decline in electricity sales revenue.

The company reported a net profit of Rs. 7.96 crore by the end of Ashadh, down 52.87% from Rs. 16.90 crore recorded during the same period of the previous fiscal year. The decline comes despite the company continuing to generate revenue from its electricity business.

The primary pressure on earnings came from the combination of lower electricity sales and higher expenses. Electricity sales revenue declined by 3% during the review period, while gross profit fell by 2.39%. The decline in revenue was accompanied by a much sharper increase in the company's cost base.

Financial expenses increased by 12.52%, adding further pressure to profitability. More significantly, total expenses increased by 49.86% compared with the previous fiscal year. The sharp rise in expenses meant that even a relatively modest decline in electricity revenue translated into a much larger decline in the company's bottom line.

The deterioration in profit was also reflected in earnings per share. AKPL's EPS declined by Rs. 2.29 to Rs. 2.05 during the review period. The fall in EPS indicates that the company's earnings available to shareholders have weakened substantially compared with the previous year.

At the end of the fourth quarter, the company's net worth per share stood at Rs. 101.77. Meanwhile, its share price valuation implied a P/E ratio of 121.75 times, indicating that the stock was trading at a relatively high multiple of its reported earnings.

Arun Kabeli Power has a paid-up capital of Rs. 3.89 billion, while other equity stood at approximately Rs. 6.89 crore at the end of the reporting period.

The latest results highlight a key challenge for the company: electricity revenue remains relatively stable, but rising financial and operating costs are consuming a larger portion of earnings. Unless expenses moderate or electricity-related revenue improves, profitability could remain under pressure despite the company's continued power generation operations.