Sazgar Engineering Works Limited recorded a net profit of Rs 6.63 billion [EPS: Rs 109.6] during the half-year ending December 2024, up 368.4% from the profit of Rs 1.41 billion [EPS: Rs 23.4] in the same period last year (SPLY).
In addition to the already paid interim dividend of Rs 10 per share, the company declared a cash dividend of Rs 10 per share (100%). Compared to SPLY, the company’s revenue increased by 207.6% to Rs 44.69 billion, while its gross profit increased by 311.36% to Rs 12.83 billion. Gross margins improved significantly as cost efficiencies enhanced profitability.
Other operating expenses increased by 363.67% to Rs 804.41 million during the time under review, while other operating income increased by 290.66% to Rs 736.22 million. Improved operational efficiency was aided by a 63.81% drop in administrative costs to Rs 258.44 million. The company’s finance costs increased by 110.2% to Rs 149.98 million due to higher interest rates and financial obligations. Meanwhile, taxation rose significantly by 352.34% to Rs 4.21 billion.
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Due to the year-end effect, the company recorded a significant decline in both three- and four-wheeler sales in 2QFY25. Four-wheeler sales fell 26 percent QoQ to 1,936 units with 350 units assumed for December 2024 from 2,605 units in 1QFY25, bring the total vehicle sales to 4,541 in the two quarters. Three-wheeler sales declined 3 percent QoQ to 5,264 units (887 units assumed for December 2024) from 5,435 units in 1QFY25.
In the second quarter of FY25, distribution expenses increased by 189 percent YoY and 4% QoQ to Rs 768 million, while administration expenses increased by 62 percent YoY and 10% QoQ to Rs. 135 million. To Rs. 333 million, other income increased 21% year over year but decreased 17% quarter over quarter. Currently, SAZEW has a PE of 4.2x for the FY25F and 3.4x for the FY26F, respectively.