Bolan Castings Limited (BCL) conducted its corporate briefing session on 26th Nov 2020 to discuss the key outcomes of 1QFY21. To recall, the company posted PAT of PKR 3Mn (EPS: 0.27), compared to a PAT of PKR 0.353Mn (EPS: PKR 0.03) in the same quarter last year.
The company manufactures parts for tractors and automobiles with two plants having total casting production capacity of 16,000 tons of grey and ductile iron.
Millat tractor ltd is the major consumer driving up to 93-95% of the sales. Therefore, weak tractor sales have a direct impact on the performance of BCL.
The company’s equity declined to Rs. 95Mn in FY20 compared to Rs. 382Mn in previous year due to the lowest tractor sales in last five years.
The company produced and sold 6,623 MT and 7,280 MT of casting in FY 20 compared to 8,694 MT and 9,646 MT of casting in FY 19, respectively.
The company sold 2,078 MT of casting in 1QFY21 compared to 2,565 MT in the same quarter last year.
During FY20, the average selling price, variable and fixed cost per kilogram were PKR 183, PKR 168 and PKR40 compared to PKR 157, PKR 141 and PKR 44 in the previous year, respectively.
The average amount of casting required in a tractor is around 350Kg, making up 30-25% of the total tractor parts.
The management stated that 70-80% of the raw material is imported due to inferior and incompatible raw material available locally.
As per the management, they carry around two months of imported and 15 days of local raw material at any given time.
The management has an optimistic future outlook given improving farm economics, higher tractors sale, government agricultural package, lower cost of auto financing and stable exchange rate.
BMA Capital Management Ltd.