Al-Ghazi Tractors Limited reported earnings per share of PKR 61.11 in CY24 against earnings per share of PKR 45.06 in CY23 an increase of 36%.
Net revenue in CY24 reached PKR 34.6 Bn remaining stagnant compared to CY23 with PKR 34.5 Bn. The company saw its gross margin increase from 19% in CY23 to 24% in CY24. In this fiscal year the company has seen its margin deteriorate to 21% in 1QCY25. Net revenue in 1QCY25 was PKR 3.6 Bn, down 62% from PKR 9.5 Bn in 1QCY24. As a result, earnings per share plummeted 93% from PKR 14.72 in 1QCY24 to PKR 1.01 in 1QCY25. AGTL is currently in the process of transforming its product line and improving production efficiencies.
Due to this, dividend has not been announced in order to reinvest. The company has recently deployed SAP SP4-HANA which is contributing to providing better insights in real time to enhance data driven decision making. In 4QCY24, AGTL launched a 85 HP tractor (NH-850) to cater to segments which demand larger tractors. Live demonstrations were also done for stakeholders. It has improved fuel efficiency and its operational capabilities were beyond the current product line. The lift-o-matic variant was also launched for those who are looking to engage in precision farming technologies and required hydraulic capabilities. Due to the strong interest in the lift-o-matic variant, this year Italian lift-o-matic model was launched with enhanced hydraulic capabilities.
Management apprised that the demand for larger tractors was being driven by the use of these tractors for uses other than agricultural as well. Alongside these initiatives, the company is also setting up an R&D facility which will become active by the end of CY25.
This facility will work to improve current product offerings and work on new products which the market demands. In this regard, the company management informed that they expect strong demand for tractors and agricultural machinery to attach to these tractors from corporate farming in the future. T
he management expects the Punjab tractor scheme to subsidize 10,000 smaller engine tractors and 10,000 large tractors in the next fiscal year. With regards to imports, the management was of the belief that new kinds of tractors being imported would help them understand the needs of consumers and allow them to tailor their product offering better for users. With regards to exports, they explained that new products needed to be developed before penetrating new markets due to varying needs and regulatory requirements. Currently, the company exports to Afghanistan. Going forward, the management was optimistic about the governments efforts to subsidize tractors as well as encourage corporate farming
Important Disclosures
Disclaimer: This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.
