Karachi: Sazgar Engineering Works Limited (SAZEW) announced its financial results for the second quarter of fiscal year 2026, reporting an earnings per share (EPS) of Rs66.55. Despite showing a year-on-year increase of 67 percent, the quarterly earnings marked a decline of 9 percent compared to the previous quarter and fell short of industry expectations.

According to JS Global, the lower-than-expected performance was attributed to reduced net sales and an increase in distribution and marketing expenses. The company's net profit for the first half of FY26 rose to Rs8.4 billion, marking a 27 percent increase year-on-year. Sazgar declared an interim cash dividend of Rs15 per share for the second quarter, bringing the total first-half dividend to Rs30 per share.

Net sales for the quarter surged 85 percent year-on-year to Rs34 billion, driven by a significant increase in four-wheeler volumes. However, the sales figures were slightly tempered by a higher proportion of sales from the lower value petrol variant of the HAVAL H6. Sales of three-wheelers saw a 12 percent decline year-on-year but improved 2 percent from the previous quarter.

Distribution expenses rose sharply by 91 percent year-on-year and 52 percent quarter-on-quarter, exceeding market expectations. The company's gross margins stood at 24.2 percent for the quarter, consistent with forecasts but lower than the previous year's 28.4 percent. Administrative expenses and other expenses saw substantial increases, while other income rose significantly by 2.1 times year-on-year.

Sazgar's effective tax rate for the quarter was 39 percent, consistent with the previous quarter but lower than the 43 percent recorded in the same period last year. Despite the mixed results, JS Global has maintained its "BUY" recommendation for Sazgar Engineering, noting the company's current trading at an attractive price-to-earnings ratio.