Karachi: Service Long March Tyres (SLM) has announced a 23% year-on-year increase in consolidated earnings per share for the first quarter of fiscal year 2027, reaching Rs0.47 compared to Rs0.39 in the same period the previous year. This growth was driven by higher sales, although the results fell short of expectations due to lower-than-anticipated gross margins.

According to JS Global, the company's gross margin decreased to 21.3% in the first quarter of FY27 from 22.6% in the same quarter of FY26, mainly due to cost pressures. The company had previously reported a gross margin of 25.3% for FY26. The improvement in earnings was attributed to higher sales and volumetric growth as SLM expanded its production capacity. The company increased its Truck and Bus Radial (TBR) tyre capacity to 2.0 million units from 1.6 million units at the end of the previous quarter.

SLM reported net sales of Rs22.1 billion in 1QFY27, marking a 34% increase compared to the same period last year, driven by the noted volumetric growth. However, the company's finance costs surged by 60% year-on-year to Rs264 million, attributed to a higher financing requirement, with short-term financing needs rising to Rs19.9 billion in September 2026 from Rs11.3 billion in June 2026.

The company's other income saw a significant increase to Rs290 million in 1QFY27, supported by higher cash and cash equivalents. Additionally, the effective tax rate declined to 2.4% from 5.6% in the previous year, primarily due to the company's operations in a Special Economic Zone, which exempts income from income tax.

Despite the mixed results, JS Global maintains a "BUY" stance on SLM, with the stock trading at a projected price-to-earnings ratio of 10.0x for FY27 and 8.5x for FY28.