Karachi, Engro Polymer and Chemicals Ltd (EPCL) unveiled its financial results for 3QCY23 today, highlighting a pronounced surge in consolidated earnings. As disclosed in a recent report by AKD Securities Limited, EPCL's earnings reached PkR2.6bn, translating to a diluted EPS of PkR2.2. This marks a substantial uptick from the preceding quarter's net PAT of PkR1.6bn, and EPS of PkR1.3. Remarkably, this outcome has surpassed AKD Securities' forecasts, owing mainly to an unanticipated surge in topline revenue.

The topline for EPCL was recorded at PkR25bn, marking an impressive rise of 31% month-over-month and 48% year-over-year. Analysts speculate that this escalation might be rooted in heightened sales volumes, especially as global PVC prices displayed no quarterly fluctuations. Another theory attributes this surge to EPCL possibly levying higher prices in response to a deceleration in imports, though this requires further verification.

In terms of gross margins, the company experienced a contraction, registering at 26.1%, a decrease from the prior quarter's 28.6%. This diminution is largely credited to escalating gas prices, given that the firm's rate is computed based on a 25% RLNG and 75% Indigenous gas price mix, particularly in the final two months of the previous quarter.

The quarter's financial costs were consistent with AKD Securities' projections, clocking in at PkR1.2bn. This showcases a year-over-year swell of 42%, primarily driven by elevated financing rates.

For a comprehensive view, FY23 cumulative earnings were pegged at PkR5.4bn, in stark contrast to the PkR9.3bn of the same period last year, reflecting a 76% YoY downturn. This decline is chiefly tied to a narrowed Ethylene-PVC core delta.

Concluding their report for the quarter, EPCL declared a cash dividend of PkR2.5 per share, which when combined with previous distributions, totals to PkR5.0 per share for the nine-month period.