ASTL is slated to announce its 3QFY22 result (21st Apr’22), where we expect the company to record NPAT of PkR582mn (EPS: PkR1.96) vs NPAT of PkR503mn (EPS: PkR1.69) in 3QFY21. The expected earnings primarily emanate from: i) 63.6/8% YoY/QoQ growth in the topline largely on account of higher rebar prices (+9.2%QoQ).

Gross margin is likely to decline compared to YoY and QoQ basis (GM: 10.8% in 3QFY22E vs. 13.9% in 3QFY21 and 11.5% in 2QFY22), where input cost pressures (avg. scrap prices up 13%QoQ) coupled with PkR depreciation against US$ (3.7%QoQ) and fuel cost are key factors. Moreover, earnings are likely to see an improvement/decline of 15.7/3.3% for YoY/QoQ. The company currently trades at FY22/23F P/E of 3.9/3.5x while 3-yr PEG stands at 0.16x with our TP of PkR57/sh provides a capital upside of 75% from last close – Buy.

Courtesy – AKD Research