Mughal Iron & Steel Industries Limited announced its 4QFY23 results, where the company posted earnings of PkR834mn (EPS: PkR2.48), marking a 36% decrease compared to PkR1.31bn (EPS: PkR3.89) last quarter. This decline is majorly attributable to an increase in finance cost compared to last quarter, clocking in at PkR1.5bn (up by 49%QoQ). The company also announced a cash dividend of PKR3.2/sh whereas the dividend for FY22 was PkR3/sh.

· Topline for the quarter increased by 10%QoQ to PkR18.9bn, while reflecting an increase of 2%YoY. The said increase in sales is attributable to a resurgence in volumes.

· Gross margins fell to 16.2% vs. 18.9% during the quarter, amidst falling retail prices (PkR260k/ton during the quarter, down ~7%QoQ). Furthermore, economies of scale may have also played a hand amidst higher volumes compared to the quarter before.

· On the operating front, finance costs increased by 49%QoQ to PkR1.5bn introspecting a possible increase in short term borrowings combined with all-time high interest rates.

· Effective tax rate for the quarter was 39%, which indicates the retrospective implementation of super tax (ET: 32% for 3QFY23).

· The company adhered to its regular practice of paying out dividends during the year-end, distributing PkR3.2/sh in 4QFY23. This was surprising amidst falling earnings and retrospective charge imposition of super tax during the quarter

Courtesy – AKD Research