Panther Tyres Ltd. (PTL) held its corporate briefing today to discuss its FY24 financial results and future outlook. The following are the key highlights as reported by AKD Research:
* The company posted a topline of PkR29.5 bn in FY24 compared to PkR21.4 bn in FY23, up 38% YoY, led by volume growth. The Company generates 70% of its sales from the replacement market, while 15% comes from OEMs and the remaining 15% from exports.
* Export sales clocked in at PkR3.6 bn in FY24, compared to PkR3.1 bn in FY23. Turkey, Egypt, and Brazil remained the company’s top export destinations. The company is currently exporting its entire range of products, including tractor, OTR, and motorcycle tyres.
* Earnings for the year clocked in at PkR466mn (EPS:PkR2.77) in FY24 compared to PkR433mn (EPS: PkR2.58) in FY23, up 7.6%YoY. Management stated that the surge in topline did not fully translate into an increase in the bottom line amid higher finance costs.
* Gross margins in FY24 clocked in at 14.6% compared to 14.5% in FY23, remaining largely flat annually amid the company’s strategy to focus on volumetric growth. However, margins for 1QFY25 stood at 11.5%, impacted by a spike in international rubber prices, which the company could not pass on to consumers.
* Management stated that demand typically decreases in the winter due to the seasonal effect, which has led to a decline in international rubber prices.
* The company made significant capex in FY24, focusing on the mixing department and front-end machinery to increase capacity and enhance production capabilities for new products. Management anticipates that these investments will yield results in the coming periods.
* The Tyres/Tyre Sets capacity increased to 9.7mn units in FY24, up from 8.1mn units in FY23, with production reaching 6.3mn units in FY24, reflecting a 44%YoY growth. Meanwhile, the Tube capacity rose to 40.6mn units in FY24, compared to 31.5mn units in FY23, with production at 21.2mn units in FY24, showing a slight 1% YoY decline.
* During the outgoing year, the company faced challenges related to smuggling and under-invoicing. On a positive front, the government’s efforts to curb smuggling have proven effective, reducing the number of smuggled products. However, under-invoicing continues to be a persistent issue.
* The company expects its machinery for OTR tyres to be operational by the end of this year, anticipating a boost in sales starting next year.
* The company’s power demand is 7-8 MW, which is fulfilled through a combination of grid power with an 11 MW capacity and captive generation. The company’s captive generation capacity stands at 7-8 MW.
* The scrip is not part of our formal coverage. We believe the declining international rubber prices would help improve the company’s profitability.
Moreover, the demand outlook from the replacement market seems promising amid improving economic indicators.
