MUGHAL is slated to announce its 3QFY22 result (28th Apr’22), where we expect the company to register NPAT of PkR1.7bn (EPS: PkR4.95) vs PkR1.1bn (EPS: PkR3.31) in 3QFY21. This will take 9MFY22 earnings to PkR5.1bn (EPS: PkR15.48) against PkR2.5bn (EPS: PkR7.47) in 9MFY21. The earnings are primarily expected to emanate from 94.4%YoY/11.7%QoQ growth in topline largely on account of higher rebar (+7%QoQ) and copper prices (+7.2%QoQ).

We expect gross margin to clock in at 14.4% compared to 16.2% in 2QFY22 due to soaring scrap prices (+13%QoQ) while surge in copper prices (+7.0%QoQ) is expected to provide some respite to the declining margins.

Moreover, earnings are likely to see an improvement/decline of 50%/9.8% for YoY/QoQ. The company currently trades at FY22/23F P/E of 3.9/3.5x while 3-yr PEG stands at 0.12x with our TP of PkR140/sh provides a capital upside of 71% from last close – Buy.

Courtesy – AKD Research