Topline Pakistan Research has published a report on International Steels (ISL), which reported earnings per share (EPS) of Rs3.58 for FY25, marking a 57% year-over-year decline, although the earnings were higher than expectations. ISL announced its FY25 results recently, recording total earnings of Rs1,559 million (EPS of Rs3.58), down 57% from the previous year. In 4QFY25, the company recorded earnings of Rs608 million (EPS of Rs1.40), representing a 2% year-over-year increase and a 46% quarter-over-quarter increase.

Key highlights from the report include:

– The results exceeded expectations, as 4QFY25 reported gross margins of 10.68%, an improvement from 10.15% in 4QFY24 and 7.78% in 9MFY25, indicating significant improvement over the nine-month trend.

– Gross margins for FY25 stand at 8.6%, compared to 12.4% in FY24.

– The sequential improvement in gross margins is attributed to a shift toward renewable energy, as announced to the exchange on May 9, 2025, regarding the commissioning of a 6.4 MW solar project. – Net revenue for 4QFY25 increased by 25% year-over-year and 20% quarter-over-quarter, reaching Rs16.6 billion. This increase was driven by a recovery in local flat steel sales.

– For FY25, net sales total Rs62,311 million, reflecting a 10% year-over-year decline mainly due to lower international Cold Rolled Coil (CRC) prices.

– During FY25, international CRC prices averaged US$555 per ton, down 12% from US$630 per ton in FY24.

– Finance costs for 4QFY25 decreased by 52% year-over-year, totaling Rs149 million, mainly due to lower interest rates. For FY25, finance costs fell by 6% to Rs806 million.

– The effective tax rate for 4QFY25 was lower than expected at 35%, compared to 39% in 3QFY25. – Alongside the results, the company announced a cash dividend of Rs 2.50 per share, which was higher than industry expectations.

– ISL is currently trading at a price-to-earnings (PE) ratio of 8.2x for FY26E and 6.5x for FY27F, with a dividend yield of 8% and 10%, respectively.