Mughal Iron & Steel Industries Ltd (MUGHAL) reported its 3QFY23 earnings earlier today, wherein the company posted Profit After Tax (PAT) of PkR1.30bn (EPS: PkR3.89) for the quarter, higher by 1.7x/56% QoQ/YoY – lower than our estimate of EPS: PkR4.95/sh.

* Net sales for the period clocked in at PkR17.24bn, relatively flat on a QoQ basis, however higher by 14%YoY. Given the sharp increase in retail prices, the unmoved topline vs. the previous quarter may be due to a reduction in volumes on a QoQ basis (possibly by 10-12%QoQ).

* Gross margins clocked in at 18.9%, possibly due to inventory gains amid sharp increases in retail prices of long-steel goods (PkR/USD depreciation and raw material shortages) during the outgoing period alongside available low-cost scrap inventories amidst relatively unrestricted imports for MUGHAL

* Operating expenses (S&D and Admin expenses) clocked in at PkR250mn, higher by 33%. This was majorly due to higher admin expenses, possibly due to salary adjustment amidst the beginning of the new year.

* Effective tax clocked in at 31.5% during the period (vs. tax

reversal of PkR427mn last quarter).

Courtesy- AKD Research