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ISL_FY21 Analyst Briefing Takeaways ,(AKD, Off the Analyst's Desk, Oct 05, 2021)

AKD, Off the Analyst's Desk

ISL: FY21 Analyst Briefing Takeaways

ISL held its analyst briefing today. To highlight, the company reported NPAT of PkR7.5bn (EPS: PkR17.16) in FY21 vs. NPAT of PkR0.5bn (EPS: PkR1.14) in the same period last year. On a quarterly basis, 4QFY21 earnings stood at PkR2.31bn (EPS: PkR5.32), down 3%QoQ. 

Key highlights of the briefing were:

• Revenue increased by 8.5%QoQ/45.2%YoY in 4QFY21/FY21 mainly reflecting higher steel prices and massive uptick in offtakes (+18%YoY) to 492K tons. Galvanized sales clocked in at 293K tons (+23%YoY) and Colled Roll Coil (CRC) sales clocked in at 199K tons (+10%YoY) in FY21. Local and export sales showed impressive growth of 19%Yoy and 11%YoY in FY21, respectively. Moreover, major export markets of the company during FY21 were Asia, North and South America, and EU.
• Local industry volumes of flat steel increased by 32.4%YoY to 1.3mn tons in FY21, comprising of 671K tons of CRC and 624K tons of both galvanized and coated steel.
• Moreover, management believes pipe steel manufacturers will likely to contribute around 200k tons to the market in FY22 where ISL is likely to capture 50-55% of market share. To note, SRO-641 is no longer applicable after reduction of regulatory duty on HRC to 5% from 13% in FY22 budget. As a result, ISL has started selling its product to pipe steel manufacturers.
• Finance cost reduced by whopping 65%YoY in FY21 as a result of the company paying off its short term loans which helped in boosting the bottom line.
• Commenting on the arrival of new products, management stated, C and Z purlins are expected to hit the market by the end of CY21. Whereas, major raw material (HRC) is mostly imported from Japan and Taiwan.
• Going forward, debottlenecking in CRC finishing capacity to enhance total CRC capacity to 350K tons from 230K tons will aid in fulfilling robust domestic demand as well as additional demand coming from pipe manufacturers. Whereas, work on HRC plant with a capacity of 1.2mn tons per annum is expected to be completed by the end of CY24. The plant will provide low and medium carbon steel HRC. Furthermore, management also foresee robust growth in exports (total export sales: PkR11.9bn (+11%YoY) in FY21) to continue in FY22 where ISL is expected to export to 30 countries across the globe.        

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