Result Highlights

• 1QFY26 earnings arrived at PKR 2.51/share, up from a loss of PKR 0.07/share in 1QFY25, up 98% QoQ.
• Mughal Iron and Steel Industries Limited announced its financial results for 1QFY26 today, reporting a major increase in earnings to PKR 926mn (EPS: PKR 2.51), compared to a loss of PKR 26mn (EPS: PKR -0.07) in the same period last year.
• In 1QFY26, MUGHAL’s sales stood at PKR 20,092mn, down 7% from 1QFY25, but its cost of sales fell much more sharply, from PKR 19,595mn to PKR 16,637mn, a 15% decrease.
• Gross margins for 1QFY26 grew to 17.2%, up from 9.2% in 1QFY25, outpacing market expectations significantly. This is a dramatic increase in Gross margins, bringing them to the highest in 10 quarters, since 3QFY23. The primary drivers were sales of previously produced inventory of non-ferrous products due to attractive market prices, and an increase in ferrous margins due to cheaper scrap imports.
• The effective tax rate was 52.5%, compared with a loss in SPLY and a 41% tax rate in 4QFY25. Therefore, the effective tax rate increased 28%.
• The PBT grew a staggering 161% QoQ in 1QFY26, signaling stronger core profitability and lower finance costs, which fell 10% QoQ from PKR 1,057mn in 4QFY25 to PKR 951mn in 1QFY26.

Recommendation

• We reiterate a BUY rating on Mughal Iron and Steel Industries (MUGHAL), with a Jun’26 target price of PKR 127/share. The stock is trading at FY26f PE of 7.1x.

Courtesy – AHL Research