We expect Tariq Glass Ltd (TGL) to post net profit of PKR813mn (EPS: PKR5.91) in 4QFY22, up c.71% YoY but down 33% QoQ. This will take net profits in FY22 to PKR4.7bn (EPS: PKR33.82), more than doubling from last year. The annual growth in FY22 profits is largely attributed to rise in volumes and glass prices. The company is expected to pay final cash dividend of PKR13.0/sh.

Key result expectations for 4QFY22:

We expect TGL to post revenue of PKR7.6bn, up 14% QoQ and 50% YoY, on account of higher prices to pass on rise in fuel costs and PKR devaluation. We expect production to fall by 13% QoQ in tandem to sluggish demand within the construction industry.

Gross margin is expected to fall by 6.8ppt QoQ (albeit up 6.5ppt YoY), amid rising fuel costs (RLNG prices rose 40% QoQ) and additional PKR devaluation of c.10% during 4Q. The decline in margin is also because of normalization as GM of 32% in 3QFY22 had reached all-time high levels.

Administration and distribution expenses are expected at PKR87mn and PKR112mn, down c.10% QoQ and up c.23% YoY. Finance cost is expected to clock in at PKR82mn (PKR81mn in 3QFY22), flat QoQ and 47% YoY on account of rising interest rates. Lower borrowings are likely to offset the high interest rates during the quarter. 

Effective tax rate for the quarter is expected to clock in at 47% due to one-off super tax of 4% to be added to the full year’s PBT.

TGL is one of the top picks in the IMS Universe for its ability to withstand economic slowdown periods and consistent profitability over the past five years. The stock is also offering a forward DY of 10%. We presently have a Buy rating on the scrip with a TP of PKR179/sh.

Courtesy – Intermarket Securities Limited.