Nishat Chunian Ltd. (NCL) announced its 3QFY25 results, reporting earnings of PkR481mn (EPS: PkR2.00) compared to PkR381mn (EPS: PkR1.59) in SPLY, up 26%YoY. The said growth is primarily attributable to lower finance costs. The result is largely in line with our expectations.

• Revenue declined by 3%YoY to PkR23.4bn compared to PkR24.2bn in SPLY, likely due to lower export volumes. We estimate company’s exports to declined by 23%YoY to US$32mn from US$42mn in SPLY. On a sequential basis, revenue increased by 13%QoQ due to a seasonal uptick in exports.
• Gross margins contracted to 10.5% vs. 12.2% in SPLY, mainly due to lower sales volumes.
• Operating expenses dropped by 25%YoY to PkR562mn from PkR745mn in SPLY, driven by 39%YoY decline in distribution expenses amid lower exports.
• Finance cost declined by 46%YoY to PkR975mn, supported by ~12%YoY reduction in outstanding borrowings and lower interest rates.
• Effective tax rate stood at 39%, compared to 39% in SPLY and 53% in 2QFY25.
• This brings 9MFY25 earnings to PkR747mn (EPS: PkR3.11), compared to a loss of PkR24mn (LPS: PkR0.10) in SPLY.
• We maintain our ‘BUY’ stance on NCL with a Dec’25 target price of PkR64/sh, offering a potential upside of 90%. Our stance is supported by: (i) expected improvement in company’s exports, (ii) easing input prices supporting margins, and (iii) reduced finance cost amid declining interest rates.

Courtewsy – AKD Research