Ghandhara Tyre & Rubber Company Ltd. (GTYR) held its analyst briefing today to discuss FY25 and 1QFY26 results and its future outlook. The following are the key highlights:
- To recall, the company posted a topline of PkR17.8bn in FY25, down 13% YoY from PkR20.5bn in the SPLY. The decline was mainly attributable to lower farm tyre sales, driven by weakening farm economics.
- The company reported a loss of PkR970mn (LPS: PkR3.00) for the year, compared to a profit of PkR241mn (EPS: PkR1.88) in FY24, primarily due to gross margin attrition.
- Notably, the gross margin declined to 13% in FY25 from 16% in SPLY, mainly due to higher costs and freight prices for certain raw materials, a revision in gas prices, and higher wage costs.
- Finance cost for the year clocked in at PkR1.4bn in FY25, compared to PkR1.7bn in FY24, primarily due to lower financing rates.
- Earnings for 1QFY26 clocked in at PkR29mn, up 38% YoY from PkR21mn in SPLY, driven by lower finance costs.
- Moreover, the government has announced various measures, such as the Kissan Card for subsidized loans, which should improve farmers’ liquidity and ultimately support the purchases of agricultural inputs, including tyres.
- Management informed that it remains committed to introducing new sizes and designs for both the OEM and replacement market segments. Additionally, the management highlighted that revenue growth is expected in the upcoming quarters, supported by better crop yields following the recent floods.
- Going forward, management expects gross margin in FY26 to grow marginally from the current level.
- Moving forward, management expects demand to improve as auto financing rates decline.
- The scrip is not in our formal coverage.
https://research.akdsl.com/638972702067162767.pdf
Courtesy – AKD Research
