MUGHAL posted impressive NPAT of PkR1.7bn in 1QFY22

Mughal Iron & Steel Industries Limited (MUGHAL) announced result for 1QFY22 where company posted impressive NPAT of PkR1.7bn (EPS: PkR5.03) vs NPAT of PkR352mn (EPS: PkR1.05), increasing by 380%YoY and 84%QoQ.

· The topline registered a growth of 81%YoY to PkR14.0bn mainly due to increase in gross margin to 19.6% against 12.5% witnessed in 4QFY21 owing to increase of 15.4%QoQ in local rebar prices and a decline of 3%QoQ on avg. scrap prices.

· Ferrous segment posted net sales of PkR10.3bn (+52%YoY) with a gross margin of 14% vs 6% in 1QFY21. Non-ferrous segment posted net sales of PkR3.75bn with a gross margin of 35% vs 47% in 1QFY21. Moreover, other income increased by 223%YoY while finance cost remained flat QoQ.

· We await clarity from management regarding the deviation from our result before updating our earnings estimates for MUGHAL. The company currently trades at FY22F P/E of 6.40x while 3-yr PEG stands at 0.34x with our TP of PkR135/sh provides a capital upside of 52% from last close – Buy.

Courtesy – AKD Research

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