The Amreli Steels Ltd (ASTL)

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Dear Clients,

Amreli Steels Ltd (ASTL) announced its 2QFY21 result today, posting Profit after Tax (PAT) of PkR312mn (EPS of PkR1.05/sh) compared to a net loss of PkR232mn (LPS of PkR0.78/sh) reported in 2QFY20.

– The result stood below market consensus of by ~20%. As of end of trading session, the stock was down by 4.8%. Profitability was largely a function of 26% Y/Y rise in revenues, 290bps increase in in gross profit margins and 43% Y/Y dip in finance costs.

– On a cumulative basis, the company recorded profits of PkR423mn during 1HFY21 as compared to loss of PkR313mn in 1HFY20.

– Sales revenue recorded a growth of 26%Y/Y and 21%Q/Q to PkR9.5bn likely on account higher volumetric sales and pricing. COGS was also up 22%Y/Y and 21%Q/Q to PkR8.5bn. GP margin remained almost flat on a Q/Q basis at 10.8% while recovered by 2.9ppts on a Y/Y basis.

– Selling and distribution expenses were up 55%Y/Y and 21%Q/Q to PkR243mn likely on account higher volumes sold during 2QFY21 as compared to 2QFY20 and 1QFY21. Admin expenses were up by 8%Y/Y to PkR142mn.

– Finance costs consolidated by 43%Y/Y and 16%Q/Q to PkR381mn likely on account of lower markup paid on borrowing.

– Lastly, ASTL recorded a tax reversal of PkR10mn in 2QFY21 against tax reversal of PkR181mn in the 2QFY20 and a tax reversal of PkR60mn in 1QFY21.

Amreli’s Report attached

KASB Research

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