ILP– 4QFY24E earnings to clock in at PkR2.8/sh:
We expect ILP to post earnings of PkR3.9bn (EPS: PkR2.8) in 4QFY24E, compared to PkR4.5bn (EPS: PkR3.2) in SPLY, a decline of 13%YoY. The said annual drop in earnings is primarily due to a contraction in gross margins and an escalation in finance costs. The top line is expected to reach PkR42.1bn, up to 20% YoY (13% growth in dollar terms), driven mainly by a 10% YoY growth in the country’s value-added exports. Gross margins are projected to contract to 26.4% from 33.3% in SPLY, owing to a 3-12%YoY drop in export prices and rising cotton and energy costs. Moreover, finance costs are expected at PkR2.5bn, an increase of 61%YoY, primarily driven by an additional PkR6.0bn in borrowings. Overall, FY24E earnings are expected to accumulate to PkR12.2/sh vs. 14.4/sh in SPLY, a decline of 8%YoY, amidst gross margin contraction.
Lastly, we expect the company to announce a final dividend of PkR3.0, taking the full-year cash payout to PkR5.0/sh. Our Jun’25 target price on the stock is PkR75/sh, with FY25E DY of 7%.
NML—EPS is expected to clock in at PkR0.6 for 4QFY24E:
NML’s 4QFY24E earnings are expected at PkR228mn (EPS: PkR0.6) vs. PkR1.0bn (EPS: PkR2.9) in SPLY, with the significant decline primarily attributed to lower gross margins. Topline for the quarter is expected to clock in at PkR40.5bn vs. PkR37.1bn in SPLY, an increase of 9%YoY. The said growth is attributable to rise in exports, which are expected to grow by 10%YoY. Gross margins are anticipated to shrink further to 10.0% vs. 13.0% in 4QFY23, mainly due to a drop in international selling prices and elevated cotton costs. Meanwhile, gross margins are anticipated to improve slightly QoQ due to reduced energy cost from company’s coal power plant amid drop in coal prices. Other income is expected to rise by 35%YoY to PkR2.7bn, mainly driven by higher dividends, including a 50%YoY increase in MCB’s dividend, along with dividends from NML’s power subsidiary/associates, including NPL, PKGP & LPL.
Further, we expect company to declare final dividend of PkR2.0 along with the result. We maintain a ‘Buy’ stance on scrip with Jun’25 target price of PkR140/sh.
NCL—EPS of PkR1.9 is expected in 4QFY24E:
We expect Nishat Chunian Ltd. (NCL) to post earnings of PkR453mn (EPS: PkR1.9) in 4QFY24E, compared to PkR448mn (EPS: PkR1.9) in SPLY, remaining flat YoY. Wherein, the higher revenue offsets the impact of lower gross margins. Topline is expected to clock in at PkR25.4bn vs. PkR20.5bn in 4QFY23, an increase of 24%YoY, primarily driven by a 23%YoY higher expected export sales. However, gross margins are projected to contract to 11.3%, impacted by lower selling prices and elevated energy costs. Finance costs are anticipated to clock in at PkR1.5bn, down 3%YoY, due to reduced debt. This would bring FY24E earnings to PkR1.8/sh, compared to loss of PkR4.2/sh in preceding year.
Finally, we expect company to announce a final dividend of PkR1.0/sh. We have a ‘Neutral’ stance on the script with Jun’25 target price of PkR27/sh.
Courtesy – AKD Research
