Millat Tractors Limited (MTL) reported a consolidated NPAT of PKR3.1bn (EPS: PKR15.32), significantly up 2.2x YoY and 27% QoQ. This performance exceeded our EPS estimate of PKR8.86, driven by stronger gross margins due to a favorable sales mix. A 2:1 share split was also announced, reducing the face value from PKR10/sh to PKR5/sh, according to a report from a research house.

Key highlights for 3QFY26: –

Net sales reached PKR17bn, a 37% YoY increase, surpassing our estimate of PKR16bn, primarily due to a shift towards higher horsepower variants.

– Gross margins improved to 38%, up 9.3ppt YoY, contrary to our expectations, likely from a focus on higher-margin products.

– Distribution costs rose by 15% YoY to PKR508mn, reflective of increased sales.

– Finance costs decreased by 30% YoY to PKR291mn, thanks to lower interest rates.

– The effective tax rate was 37%, down from 39% last year. Despite a 9% YoY volume decline in 9MFY26 due to weak agricultural demand, MTL’s strategy towards higher-margin products has mitigated some of the pressure.

The end of sales under the Green Tractor Scheme could further impact volumes, and the closure of the Afghan border poses additional challenges, although expansion efforts into new export markets are ongoing.