Millat Tractors Limited (MTL) announced its earnings results today for 3QFY25. The company reported an unconsolidated profit of Rs 1.3 billion and earnings per share (EPS) of Rs 7.24. This represents a 56% decline year over year (Yoy) and a significant 54% decrease quarter over quarter (Qoq).

– This results in 9MFY25 earnings totalling Rs 5.05 billion, with an EPS of Rs 26.32, which is down 40% YoY compared to Rs 8.3 billion (EPS of Rs 43.7) in 9MFY24.

– The decline in earnings is primarily due to a 50% YoY drop in sales and a 36% QoQ decrease, with tractor sales falling to 4,411 units in 3QFY25, down from 8,411 units in 3QFY24 and 7,541 units in 2QFY25.

– Demand for tractors remained muted during 3QFY25 amid weak farm economics. Notably, in 2q FY25, the Punjab government announced a Green Tractor scheme, which provided a one-off boost to the company’s sales.

– Gross margins surprisingly increased by 283 basis points QoQ and 398 basis points YoY to 28.3% in 3QFY25, despite the decrease in sales. In 9MFY25, gross margins were recorded at 27.1%, compared to 23.76% in 9MFY24.

– Distribution expenses decreased by 36% year-over-year (Yoy) and 27% quarter-over-quarter (Qoq), attributed to the overall decline in sales. Similarly, other expenditures decreased by 53% year-over-year (Yoy) to Rs 166 million due to lower WPPF and WWF charges, in line with reduced profitability.

The company’s effective tax rate was reported at 38% for 3q FY25, compared to 34% in 3q FY24. Meanwhile, in 2QFY25, the company experienced a tax reversal of Rs 67 million. The effective tax rate for 9MFY25 was 18%, down from 38% in the corresponding period.

– MTL is currently trading at a FY26F price-to-earnings (PE) ratio of 11.22x, with a dividend yield (DY) of 7.6%.

Courtesy – Topline Research