International Steels Limited (ISL) announced its financial results for 4QFY24 today. The company recorded earnings of PkR 0.59bn (EPS of PkR 1.37) vs. PkR 1.94bn (EPS of PkR 4.46) in 4QFY23.
This brings full-year FY24 earnings to PkR 3.65bn (EPS of PkR 8.40), up 4% year over year.
Along with the result, ISL also declared a final cash dividend of PkR 3.0/share, bringing the full-year FY24 dividend to PkR 5.5/share.

The earnings came lower than expectations due to lower-than-expected sales and gross margin.
We estimated gross margins of 12.7% for 4QFY24; however, the actual gross margins came in at 10.1%. We believe this deviation is primarily due to narrower CRC and HRC spreads, combined with lower volumetric sales, which reduced the absorption of fixed costs.

ISL’s revenue clocked in at PkR 13.2bn in 4QFY24, down 30% YoY and 18% QoQ due to lower volumetric sales amid depressed construction activities and white goods sales.

During 4QFY24, the white goods industry faced sluggish demand, as evidenced by a 25% YoY decline in refrigerator production and a 38% YoY drop in air conditioner production. In contrast, deep freezer production saw a modest 3% YoY increase, likely driven by Eid-related demand.

In contrast, 2/3 wheelers rebounded in 4QFY24, with a 21% YoY increase and an 8% QoQ rise, driven by a low base from the previous year. Meanwhile, construction activity slowed, as indicated by a 7% YoY decline in local cement dispatches.

In 4QFY24, finance costs increased to PkR 298mn, up 37% year over year and 72% quarter over quarter due to higher borrowing.

The company reported a tax reversal of PkR 254mn in 4QFY24 against tax expenses of PkR 1,167mn in 4QFY23 and PkR 139mn in 3QFY24.
We maintain a buy stance on ISL, with the stock currently trading at a FY25F and FY26F PE ratio of 6.1x and 4.4x vs last 5-year and 10-year average PE of 6.0x and 8.3x.

Courtesy – BMA Research