ISL - 1QFY24 Result Review - Curtailed gross margins lead to lower earnings, (AKD Off the Analyst's Desk Oct 24, 2023)
AKD, Off the Analyst's Desk
ISL - 1QFY24 Result Review – Curtailed gross margins lead to lower earnings
International Steels Limited announced its 1QFY24 results, where the company posted earnings of PkR1.12bn (EPS: PkR2.57), reflecting a 42% decrease compared to PkR1.94bn (EPS: PkR4.46) last quarter. This decline is majorly attributed to a higher cost of goods sold for the period, amounting to PkR16.7bn (up by 16%QoQ). Net Revenues during the quarter remained relatively flat, amounting to PKR19.2bn (up by 1%/16% QoQ/YoY).
- Topline for the quarter increased by 1%QoQ to PkR19.2bn, while reflecting a 16% increase YoY. The said increase is possibly associated with an increase in CRC and HDGC volumes, taking into account an uptick in 2/3 wheeler sales and increasing LSM index (Aug2023: up 2.56%YoY).
- Gross margins diminished to 12.83% vs. 23.55% in the quarter before, reflecting an increase in manufacturing costs which can be elucidated by higher power tariffs following base tariff revisions during July 2023.
- On the operating front, selling and distribution expenses fell by 34%QoQ to PkR368mn and administrative expenses decreased by 18%QoQ to PkR107mn. Other operating expenses saw a significant decline of 70%QoQ, concluding to PkR145mn. Finance costs decreased slightly by10%QoQ to PkR196mn, introspecting a paydown of company’s debt where the company is taking ardent efforts in deleveraging itself.
- Taxes dropped by 44%QoQ to PkR656mn amidst absence of retrospective super tax charge implementation.
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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