Amreli Steels Limited (ASTL) announced its 2QFY22 financial result today where the company posted a profit after tax (PAT) of PKR 602mn (EPS: PKR 2.03) compared to PKR 312mn (EPS: PKR 1.05) in SPLY. This took the 1HFY22 bottom-line to PKR 1,303mn (EPS: PKR 4.39) vis-à-vis last year’s profitability of PKR 423mn (EPS: PKR 1.42), depicting a growth of 3x.

Result Highlights

· Topline in 2QFY22 witnessed a noteworthy growth of 55% YoY (all time high quarterly revenue of PKR 14.8bn) given a significant jump in rebar prices. A similar trend was witnessed during 1HFY22 whereby revenue surged by 53% YoY to PKR 26.6bn amid improved pricing coupled with a slight uptick in rebar sales.

· Gross margins arrived at 11.5% in 2QFY22 compared to 10.8% in 2QFY21 as scrap prices underwent a jump from USD 361/ton to USD 560/ton at present coupled with PKR depreciation and higher electricity tariff, which offset the impact of higher rebar prices. On a QoQ basis margins came down from 14.3% primarily attributable to augmented scrap prices and higher electricity tariff. In 1HFY22 margins settled at 12.7% vis-à-vis 10.8% in SPLY due to improved margins in the last quarter (higher primary margins plus inventory gains) which aided the average during the half year.

· Financial charges in 2QFY22 went up by 24% YoY to PKR 471mn in lieu of augmented borrowing.

· The company booked effective taxation at 13% in 2QFY22 in contrast to a tax credit of PKR 10mn in SPLY.

Courtesy- AHL Research