Nishat Mills Limited (NML) announced its 3QFY23 earnings earlier today, wherein the textile manufacturer recorded NPAT of PkR3.3bn (EPS: PkR9.4) for the quarter, lower by 10%QoQ and 4%YoY. The earnings were higher than our estimates.

* NML’s revenues clocked in at PkR37.1bn during 3QFY23, higher by 12% compared to the earlier quarter. The growth in the topline can be attributed to the devaluation of the PkR against the greenback.

* NML’s gross margins have clocked in at 13.1% in 3QFY23, compared to 14.4% in the earlier quarter. The lower margins can be attributed to higher input costs, in the form of increased energy costs and raw material costs.

* Overheads at NML also saw an increase on a sequential basis, wherein Distribution expenses witnessed an increase of 14%QoQ to PkR1.5bn in 3QFY23. Furthermore, Admin Expenses also increased by 5%QoQ to PkR534mn during the quarter.

* Finance costs saw a substantial increase during the period, to the tune of 34%QoQ, as interest rates in the country were hiked substantially during the quarter. The finance costs correspond to ~43% of gross profit earned during the three-month period.

* In 9MFY23, the company posted earnings of PkR11.1bn (EPS: PkR31.7), higher by 23% compared to the SPLY. The growth in profitability is largely attributable to non-operating factors, including 105%QoQ increase in Other income.

Courtesy- AKD Research