Nishat Chunian Limited (NCL) announced its 1QFY24 results, where the company posted a PAT of PkR0.5bn (EPS: PkR2.1) vs. a profit of PkR0.4bn (EPS: PkR1.9) in the preceding quarter, an increase of 13%QoQ, owing to a substantial growth in topline and relatively flat gross margins i.e., 13.7% vs. 14.1% in the previous quarter.

· Topline for the quarter clocked in at PkR24.2bn, posting an increase of 18%/59% QoQ/YoY compared to PkR20.5/15.2bn in 4QFY23/SPLY. The said increase is possibly due to an uptick in the export sales coupled with PkR depreciation.

· Gross margins remained almost flat QoQ, clocking in at 13.7% vs. 14.1% in the previous quarter, where we believe the impact of higher fuel and energy costs is largely offset by lower cotton prices.

· Distribution expenses inflated by 13%QoQ, clocking in at PkR482mn vs. PkR425mn in the preceding quarter. This increase is possibly due to increased freight charges owing to increased fuel prices. Conversely, admin expenses decreased by 29%QoQ, arriving at PkR106mn vs PkR149mn in 4QFY23.

· Finance cost for the quarter clocked in at PkR2.0bn vs PkR1.6bn in 4QFY23, an increase of 22%QoQ, possibly due to the increase in ST borrowings amidst composites’ liquidity crunch, and overall high effective interest rate.

Courtesy – AKD Research