MUGHAL - Marches to the beat of its own drum , (AKD Detailed Report, Nov 30 2023)
Marches to the beat of its own drum
- Mughal’s diverse product portfolio, efficient supply chain, and strategic entry in the non-ferrous segment back in 2020 enables it to be the strongest contender and therefore stands as our best pick in the steel sector. Company’s infiltration in the non-ferrous segment has allowed it to increase global footprint in the form of copper ingots and copper granules exports towards China, with the segment offering a highly positive outlook considering it still being in nascent stages, with absence of any indications of slowing/maturing thus far.
- Additionally, company vows to resolve the sector’s commoditized narrow margins through shifting energy mix with the addition of coal-based captive (MEL: 36.5MW) by FY25 alongside slight tilt towards renewables, sustaining/shielding margins throughout the medium term. Further, expectations of falling interest rates by end FY24 is expected to boost company’s bottom-line significantly, (finance cost/operating profit in FY23: ~50%) as MUGHAL stands as one of the most leveraged players in the sector space (D/E: 1.1x).
- Finally, company’s soaring brand equity along with one of the most diversified portfolios in the long-steel space propels it to be the forefront of recuperating aggregate demand going forward.
- Overall, we assign a Dec’24 target price of PkR95/sh and a “BUY” stance, offering an upside potential of 44% from last close. The company presently trades at a FY24 forward P/E of 5.4x , with DY% expectations of 3.0% during the same period.
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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