Mughal Iron & Steel’s revenue remains robust.

According to IMS Research, Mughal Iron & Steel (MUGHAL) has posted 2QFY24 NPAT of PKR773mn (EPS: PKR2.30), up 64% YoY and 50% QoQ. The result was significantly higher than the market’s expected EPS of PKR0.94, where the deviation stemmed from higher-than-expected revenue and lower taxation. The result takes 1HFY24 NPAT to PKR1.1bn (EPS: PKR3.25), down 19% YoY SPLY.

Key highlights from 2QFY24:

The company reported revenues of PKR25.0bn, up 19% QoQ and 46% YoY, which came in higher than our expectations of PKR20.9bn, likely because of strong performance from copper exports as steel sales and prices were down during the quarter.

Gross margins contracted to 10.0%, reflecting a decrease of 2.0 ppt QoQ but an improvement of 2.6 pt YoY. Experts believe the sequential contraction in margins is due to declining steel prices during the quarter. Finance costs were recorded at PKR1.4bn, up 36% YoY but down 14% QoQ. The sequential decline in finance costs may be due to a reduction in ST borrowings.

Among other line items, i) sales and marketing expenses fell by 58% QoQ to PKR30mn due to weaker domestic sales during the quarter, and ii) Effective tax rate was recorded at 7% in 2QFY24 vs 29% in the previous quarter, which may be due to higher contribution of exports; however, we await detailed financials for further clarity.

MUGHAL’s revenue remains robust, yet shrinking gross margins have kept gross profitability steady. Despite a decline this quarter, finance costs remain high due to elevated interest rates. While the steel demand outlook is muted, steady copper demand from China and potential monetary easing later in the year offer positives.



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