Sazgar Reports Nearly 370% Profit Growth in First Half of FY25

marryam qureshi

Feb 25, 2025

Sazgar Engineering Works Limited (PSX: SAZEW) has reported a profit after tax of Rs. 6.6 billion for the first half of FY25, marking a 369 percent increase compared to the same period last year.

In the second quarter of FY25, the company's earnings reached Rs. 2.4 billion (EPS of Rs. 29.83), reflecting a 218 percent year-on-year increase but a 43 percent quarter-on-quarter decline. The results were below industry expectations, possibly due to the company shifting most of its December sales to January 2025.

Net revenues for the December quarter were Rs. 18.4 billion, falling short of the expected Rs. 20 billion but still representing a 2.8x year-on-year increase. The half-year accounts will provide more clarity on four-wheeler sales figures for December 2024.

Sazgar announced a dividend of Rs. 10 per share for the second quarter of FY25, bringing the total payout for the first half of FY25 to Rs. 20 per share.

Gross margins stood at 28.35 percent in the second quarter of FY25, slightly down from 28.94 percent in the first quarter of FY25 and 24.79 percent in the second quarter of FY24. The effective tax rate rose to 43 percent in the second quarter of FY25, up from 36 percent in the first quarter of FY25 and 39 percent in the second quarter of FY24, bringing the first half of FY25 effective tax rate to 39 percent.

The company recorded a significant decline in both three-wheeler and four-wheeler sales in the second quarter of FY25 due to the year-end effect. Four-wheeler sales fell 26 percent quarter-on-quarter to 1,936 units, while three-wheeler sales declined 3 percent quarter-on-quarter to 5,264 units.

Distribution expenses surged 189 percent year-on-year and 4 percent quarter-on-quarter to Rs. 768 million, while admin expenses increased 62 percent year-on-year and 10 percent quarter-on-quarter to Rs. 135 million in the second quarter of FY25. Other income rose 211 percent year-on-year but declined 17 percent quarter-on-quarter to Rs. 333 million.

Sazgar Engineering Works Limited is currently trading at a FY25F/26F PE of 4.2x and 3.4x, respectively.