NML_4QFY23 Result Review—Lower than expected topline kept earnings in check (AKD Off the Analyst's Desk Sep 26, 2023)
AKD, Off the Analyst's Desk
NML: 4QFY23 Result Review—Lower than expected topline kept earnings in check
Nishat Mills Limited (NML) announced its 4QFY23 result earlier today, wherein the entity recorded unconsolidated NPAT of PkR1.03bn (EPS: PkR2.9) for the quarter, lower by 69%QoQ and 18%YoY. This decline in earnings is majorly attributable to a quarterly decline in other income (absence of dividends from power subsidiaries/associates) and high taxation.
- NML’s topline clocked in at PkR37.1bn during 4QFY23, remaining flat QoQ wherein the impact of PkR devaluation was largely offset by lower textile product prices. To note, avg. readymade garment export prices have declined by 21%QoQ.
- NML’s gross margins have remained flat on a quarterly basis, clocking in at 13.0% in 4QFY23, compared to 13.1% in 3QFY23. Whereas on annual basis, margins have improved by 150 bps on account of rupee devaluation and decline in cotton product prices (↓5% YoY).
- Distribution expenses up-ticked 8%QoQ, clocking in at PkR1.6bn vs. PkR1.5bn in the previous quarter. This quarterly increase is possibly due to higher freight charges.
- Furthermore, finance cost clocked in at PkR2.4bn, an increase of 16%QoQ, due to higher interest rates wherein the effective interest rate increased by 300bps during the quarter.
- Effective taxation is recorded at PkR1.1bn (ETR: 52.5% vs 17% in 3QFY23) due to imposition of supertax.
- Overall for FY23, earnings clocked in at PkR34.60/sh vs. PkR29.3/sh in the year before. This increase was primarily due to PkR devaluation. Finally, the company announced a cash dividend of PkR5/sh.
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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