Nishat Chunian Limited (NCL) announced its 4QFY23 results yesterday, where the company posted an unconsolidated NPAT stood at PkR0.44bn (EPS: PkR1.9) compared to PkR389mn (EPS: PkR1.6) in the previous quarter. The earnings posted by NCL are substantially higher than our estimates.

· NCL posted revenues of PkR20.5bn during 4QFY23, higher by 18%QoQ. The growth in the company’s topline is likely being driven by higher local currency recognition of export proceeds. To recall, the currency lost ~10% during the period.

· Gross margins for the quarter improved by 450bps, clocking in at 14.1% vs 9.6% in the previous quarter. This positive growth is majorly due to rupee devaluation along with decline in local cotton prices (↓1%QoQ).

· Finance cost clocked in at PkR1.6bn, higher by 9%QoQ, due to interest rate hike during the period.

· Furthermore, effective taxation is reported at PkR417mn (ETR: 46% vs 25% in previous quarter), owing to retrospective supertax implementation.

· Company LAT stood at PkR1.0bn (LPS: PkR4.2) compared to PAT of PkR7.5bn (EPS: PkR31.1) in SPLY. The losses may be attributable to: i) lower export orders, ii) higher energy and operational costs, and iii) higher financial charges in FY23.

Courtesy – AKD Research