Karachi, June 18, 2021 (PPI-OT): ITTEFAQ – Corporate Briefing takeaways

Ittefaq Iron Industries Limited (ITTEFAQ) held its corporate briefing session jointly co-hosted by JS Global Capital Limited to discuss the latest 9MFY21 result and shed light on the future prospects of the company. To recall, ITTEFAQ posted a profit of Rs79mn/Rs192mn (EPS: Rs0.55/Rs1.33) in 3QFY21/9MFY21 as against a loss of Rs49mn/Rs202mn (LPS: Rs0.34/Rs1.40) during 3QFY20/9MFY20. The management shared that the overall boost in construction activity (a result of favourable policies) provided for better pricing power during the year.

Key takeaways:

The company is principally engaged in the manufacturing of iron bars, girders, related and ancillary products.

While the company is looking to expand its product line to include ‘Channel and Angel’, ‘T-Iron’ and ‘I and Beam’, the products currently on offer include:

Grade 60 and 40 deformed Bars

Girder

Steel Billets

Similarly, the customer portfolio can be broken down into three broad categories: Retail, Corporate sector and the Government.

55% of the revenue comes in from Grade 40 re-bars (consumed by retail sector), 35% from Grade 60 re-bars (sold to the govt. and corporate sector) while Girder contributes to the remaining 10%. It is pertinent to note here that Girder is sold on a cash-basis.

The management shared that a new company ‘ITTEFAQ trading’ has been formed in the United Kingdom for procurement of Scrap which should improve procurement and raw material costing. The impact of this will be visible in 4QFY21.

Moreover, the company is has also shifted its focus to a B2C business model in efforts to capture market share. This is evident in the higher sales of the Grade 40 re-bars.

For FY21, the management expects a 79% improvement in sales to 65k tons.

For the next year, the high PSDP allocation in the budget indicated strong demand will continue into FY22.