EUR 4.42 For Business Accounts Only

Pakistan Tractors: Superb sales growth has legs; raise estimates

• We revise our estimates upward for both MTL and AGTL on the back of better-than-expected sales growth and continuation of GoPs pro-agri policies. Our revised TP for MTL (rolled over to Jun’18) is PkR1,634/sh (up 25%) and for AGTL (Dec’17) is PkR 671/sh (up 36%) respectively. We maintain our Buy stance on MTL and upgrade AGTL to a neutral stance on the back of impressive sales.

• Tractor sales have shown an impressive growth trajectory with 11MFY17 sales of 49,945 units, up 67% YoY, on the back of lower GST and improved agricultural dynamics in the country. This is likely to persist in the near term due to increased govt. incentives for farmer community and uptrend in commodity prices. Therefore, we revise our estimates upwards for both MTL and AGTL by 15-30%.

• While Federal and Punjab budget had negligible direct impact on the Tractor sales, Govt. of Sindh announced PkR2bn subsidy on tractors. We await further clarity on methodology of this scheme before incorporating it in our estimates.