Interloop Limited (ILP) announced its 3QFY24 result today, where the company recorded an unconsolidated earnings of Rs4.1bn (EPS of Rs2.95).

This takes 9MFY24 earnings to Rs13.2bn (EPS of Rs9.39) down 7% YoY as compared to 9MFY23 profit of Rs14.2bn (EPS of Rs10.11).

The earnings came higher than expectations for 3QFY24 due to higher than expected Gross Margins. Gross Margins for 3QFY24 stood at 29.1% against 27.6% in 2QFY24. Gross Margins were expected to decline due to the capitalization of the apparel plant project along with PKR appreciation, which was expected to impact margins negatively.

Net Sales for 3QFY24 increased by 25% YoY and 11% QoQ to Rs39bn, higher than expectations. The commencement of operations of the Apparel Plant in mid-November contributed to this growth, enabling full operational capacity and driving the increase in sales.

Distribution Expenses rose by 44% YoY and 14% QoQ to Rs1.3bn. Administrative Expenses increased by 47% YoY and 2% QoQ to Rs2.3bn.

Other income falls by 6% YoY and 58% QoQ.

Finance Costs for the company have increased by 95% YoY while remained flattish QoQ to Rs2.6bn.

Effective tax rate stood at 12% in 3QFY24 (1.40% of turnover) compared to 3% in 3QFY23 (0.94% of turnover) and 15% in 2QFY24 (1.44% of turnover).

We maintain a Buy call with a Dec 2024 Target Price of Rs92 per share, representing a 30% upside. Currently, ILP is trading at FY24E and FY25F P/E of 5.7x and 4.5x.

Courtesy – Topline Pakistan Research