ICI Pakistan result review for 1QFY21

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ICI Pakistan Limited (ICI) announced its 1QFY21 financial result today where the company posted a profit after tax (PAT) of PKR 985mn (EPS: PKR 10.66), up by 18% YoY compared to PKR 836mn (EPS: PKR 9.05) during SPLY. On a QoQ basis, earnings increased by 6.8x. 

Result Highlights

·        During 1QFY21, net sales remained in line with same period last year at PKR 14,465mn. However, on QoQ basis sales went up by 35% due to revival of economic activity in the country post lockdown.

·        Gross margins of the company came down by 19bps to 19.4% during 1QFY21. However, they went up by 219bps on a QoQ basis. Rise in gross margins on QoQ basis is witnessed due to higher volumetric sales in all segments due to lockdown in the previous quarter.

·        The company booked share of profit of PKR 103mn from NutriCo Pakistan, which is 30% down compared with same period last year.

·        Finance costs of the company decreased by 43% YoY to PKR 284mn due to lower interest rates.

Outlook and Recommendation

We have a BUY call on the scrip with a Jun’21 target price of PKR 946/share. Our liking for the stock is premised on i) Expansion in the company’s Soda Ash manufacturing facility to 550k tons per annum from current capacity of 425k tons per annum, ii) Improved margins of PSF business due to specialty fiber, iii) Successful commissioning of NutriCo Morinaga (Private) Limited, iv) Transformation of Pharma Business and growth outpacing the market, (v) Expected growth in textile chemicals, polyurethane, and Agri sciences, and (vi) Diversified products portfolio and businesses.

(AHL Research)

 
 

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