One of the most glaring paradoxes in Nigeria’s economy is the country’s electricity market: there is a huge demand for electricity in the country, but dependable supply of electricity continues to fall short of what people and businesses require. This paradox presents investors with both opportunity and risk. Transcorp Power Plc (NGX: TRANSPOWER) is one business that is getting more and more entangled in this story. In spite of the growing profits and assets, the company’s share price has been under pressure. The stock opened the 2026 fiscal year at NGN307.00 and closed at NGN219.60 at the end of July 2026, losing 28% of its value. That poses a fascinating question: why has TRANSPOWER’s market valuation suffered even though it is crucial to one of Nigeria’s most pressing long-term economic needs? The answer is more than simply labelling the shares as “cheap.”

A power company with a bigger story

TRANSPOWER, a subsidiary of Transnational Corporation Plc, is involved in the generation of electric power in Nigeria. And there is a strong demand for reliable power to support industries and households and promote economic growth.

The company was in a strong financial position going into 2026

The company’s revenue increased by 30.2% to ₦398.3 billion in the 2025 fiscal year from ₦305.9 billion in 2024. Operating profit gained 9.7% to close at NGN125.1 billion at the end of 2025. Profit After Tax increased by 14.3% to ₦91.4 billion, causing the Earnings Per Share to climb from ₦10.67 to ₦12.19. The balance sheet showed a remarkable improvement. Shareholders’ fund increased by 44% to ₦183.4 billion, while total assets rose 42% to ₦563.5 billion. In addition, borrowings decreased from ₦37.6 billion to ₦30.7 billion. Those numbers do not instantly mirror the financial profile of a company with impaired long-term financial health.

However, 2026 presents a fresh challenge. While electricity can be produced, it isn’t always delivered through the national grid to the end users. Therefore, TRANSPOWER’s generating equipment isn’t necessarily the biggest problem it faces. It’s the surrounding infrastructure. The company found it difficult to transmit electricity from its plant in the first half of 2026 because of repeated destruction of transmission infrastructure by vandals. The Transmission Company of Nigeria (TCN), a government-owned company, owns and operates the transmission infrastructure for transporting electricity across the country. The numbers showed the effects. Revenue in the first half-year (H1) of 2026 was roughly ₦182 billion, down from ₦205.8 billion in H1 2025. The operating profit also decreased from NGN59.1 billion to NGN55.7 billion. Net cash flow from operating activities was a negative figure of NGN5.6 billion. At first glance, declining earnings and revenue might justify investors’ anxiety. But there’s more to the story. Shareholders’ funds climbed to ₦189.3 billion while total assets expanded to ₦619 billion despite the poorer first half-year performance. To put it another way, the business did not abruptly lose money. Rather, the environment in which it operated grew more challenging. This distinction is important.

The 625MW Conundrum

TRANSPOWER’s story is one of its most intriguing features.  Vandalism of transmission infrastructure and gas supply disruptions limited its capacity utilisation to 70% of the available capacity of 625MW during the first quarter of 2026. This sparks a potentially significant discussion about investment in the company. It means that the company faces operational risk from factors beyond its control, e.g. transmission infrastructure, gas supply, and electricity industry payment discipline.

The Nigerian energy market comprises generating companies, transmission company, distribution companies and regulators. One weak link in that chain can have an impact on the system as a whole. Therefore, it is important to go beyond TRANSPOWER’s financial statements in evaluating whether it is worth investing in. The broader market for power is important.

Reasons why the stock may be cheap

Price and value are not the same. It takes more than just a falling share price to declare a stock cheap. A company is only undervalued when its future earnings power, growth prospects and competitive position are not sufficiently reflected in the market price. TRANSPOWER possesses a number of qualities that might support the claim that it is cheap.

1. Strong historical earnings growth and earnings resilience

The company’s net profit has been increasing at a compound annual growth rate of 51.3% over the last five years. Revenue has grown at 43.7% over the past five years. The company’s ability to maintain profitability in the face of challenging operational conditions may be its best defence. Despite the drop in revenue, H1 2026 Profit Before Tax (PBT) was ₦55 billion. In its H1 financial statement, the company also announced higher gross profit, operating profit and PBT margins. This implies that the company can withstand unexpected operational disruptions to some extent. It indicates that when operational conditions are favourable, the company can make significant profits.

2. Growing assets

By June 2026, TRANSPOWER’s assets had grown to ₦619 billion from ₦563.5 billion at the end of 2025. The return on assets of 6.2%, however, trailed the 9-year average of 11.8%. Whether those assets can produce greater returns over time is a crucial concern for investors. The company’s operating environment may reduce operational use of assets and affect the overall asset efficiency. If the operating environment improves, capacity utilisation and return on assets of the company will rise. 

3. Regular dividend payment

The dividend policy of the company provides an additional aspect.  TRANSPOWER has been paying dividends consistently. Its earnings have been covering the dividends sufficiently. This is of great interest to potential investors, especially those who prioritise regular income flows. Dividends also give shareholders a return when the company is not favoured by the market.  Therefore, rather than being evidence that the company is cheap, a dividend is an important component of a stock’s total return.

4. Nigeria and West Africa need power

Nigeria requires a system that can efficiently and dependably transfer power from producers to consumers. TRANSPOWER does not only sell power to Nigerian customers. It also sells to international customers. It realised revenue of NGN65.3 billion from customers outside Nigeria, while the Nigerian market produced revenue of NGN116.7 billion in the first half of the 2026 fiscal year.
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In conclusion, TRANSPOWER’s value will ultimately rest on Nigeria’s ability to transform its potential for energy generation into dependable delivered power. This makes TRANSPOWER a company worth keeping a close eye on for investors watching Nigeria’s energy sector—not because a 28% decline ensures a recovery, but rather because the disparity between its physical capacity, earning potential, and market valuation may become more significant if Nigeria’s energy infrastructure starts to improve.