Mughal Iron & Steel Industries Limited (MUGHAL) announced its result for 1QFY21 wherein the company reported a PAT of PKR 352mn (EPS: PKR 1.40) compared to PKR 193mn (EPS: PKR 0.77) in the previous quarter, up 82% QoQ.

The improvement in earnings can mainly be attributed to increase in overall long steel products due to the commencement of the construction package by federal government and Post Covid recovery of the economy.

The Net sales increased by 29%/16% QoQ/YoY to PKR 7.734Bn due to increase in rerolling sales and improvement in exports.

The gross margins also witnessed an accretion of 0.6ppts to 11.1% in 1QFY21 compared to 10.5% in the previous quarter. The sales and Distribution expense reflected a major decrease of 26% QoQ to 29Mn while admin expenses and other income both increased by 19% to PKR 117 Mn and PKR 31 Mn respectively.

Financial charges decreased 22%YoY due to the lower interest rate environment. Moreover, lower effective tax rate of 14% supported the bottom-line 1QFY21.

All the above changes resulted in Profit margin increasing by 1.4% QoQ to 4.6%.

BMA Capital Management Ltd.