Pak Suzuki Motor Company to release its 2QCY21 financial result on 31st Aug’21

Pak Suzuki Motors Company Ltd. (PSMC) is scheduled to release its 2QCY21 financial result on 31st Aug’21. We expect the company to post a profit after tax (PAT) of PKR 1,899mn (EPS: PKR 23.07) in 1HCY21, compared to loss of PKR 2,462mn (LPS: PKR 29.92) in 1HCY20. Topline of the company is expected to increase by 141% YoY to PKR 66.2bn during 1HCY21 due to lower financing rates and revival of economic activity which aided volumetric growth of 137% YoY (50,096 vs. 21,116 units in 1HCY20).

On a quarterly basis, revenue of the company is expected to increase by 209% YoY amid low base effect and volumetric jump of 193% YoY to 22,019 units. Gross margins are expected to settle at 8.11% (2QCY20: -6.29%) due to appreciation of PKR against USD and economies of large scale.

Finance costs of the company are expected to dip by 74% YoY to PKR 235mn on account of a decline in short term borrowings along with lower financing rates. Furthermore, we expect other income to increase by 377% YoY to PKR 671mn due to surge in cash and bank balances.

Recommendation:

Currently, we have a ‘BUY’ call on the stock with a Dec’21 target price of PKR 416.5/share.

Courtesy – AHL Research

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