AKD Securities Limited - Off the Analyst's Desk (October 26, 2021)

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AKD Securities Limited – Off the Analyst’s Desk (October 26, 2021)

October 26, 2021

Karachi, October 26, 2021 (PPI-OT): ASTL: 1QFY22 Result Review (above expectation)

Amreli Steels Limited (ASTL) announced result for 1QFY22 where company posted impressive NPAT of PkR702mn (EPS: PkR2.36) vs NPAT of PkR111mn (EPS: PkR0.37), increasing by 534%YoY and 58.4%QoQ.

The topline registered a growth of 50%YoY to PkR11.8bn mainly due to increase in gross margin to 14.3% against 10.8% witnessed in 4QFY21 owing to increase of 15.4%QoQ in local rebar prices and a decline of 3%QoQ in avg. scrap prices.

Finance cost reduced by 15%YoY for 1QFY22 and expected to further reduce as a result of the company paying off its short-term loans.

We await clarity from management regarding the deviation from our result where AKD Securities Ltd. will be hosting ASTL’s corporate briefing for 1QFY22 results today (Link to register: https://us06web.zoom.us/meeting/register/tZIvdu-prTIvHddCJV12-MM2mY0K6CqUnT_l.)

The company currently trades at FY22F P/E of 6.40x while 3-yr PEG stands at 0.34x with our TP of PkR57/sh provides a capital upside of 55% from last close – Buy.