Nishat Mills Limited (NML) announced its 4QFY23 result earlier today, wherein the entity recorded unconsolidated NPAT of PkR1.03bn (EPS: PkR2.9) for the quarter, lower by 69%QoQ and 18%YoY. This decline in earnings is majorly attributable to a quarterly decline in other income (absence of dividends from power subsidiaries/associates) and high taxation.

· NML’s topline clocked in at PkR37.1bn during 4QFY23, remaining flat QoQ, wherein lower textile product prices largely offset the impact of PkR devaluation. To note, avg. Readymade garment export prices have declined by 21% QoQ.

· NML’s gross margins have remained flat every quarter, clocking in at 13.0% in 4QFY23, compared to 13.1% in 3QFY23. Annually, margins have improved by 150 bps because of the rupee devaluation and decline in cotton product prices (↓5% YoY).

· Distribution expenses up-ticked 8%QoQ, clocking in at PkR1.6bn vs. PkR1.5bn in the previous quarter. This quarterly increase is possibly due to higher freight charges.

· Furthermore, finance cost clocked in at PkR2.4bn, an increase of 16%QoQ, due to higher interest rates wherein the effective interest rate increased by 300bps during the quarter.

· Effective taxation is recorded at PkR1.1bn (ETR: 52.5% vs 17% in 3QFY23) due to imposition of supertax.

· Overall for FY23, earnings clocked in at PkR34.60/sh vs. PkR29.3/sh in the year before. This increase was primarily due to PkR devaluation. Finally, the company announced a cash dividend of PkR5/sh.

Courtesy – AKD Research