Karachi: Sazgar Engineering Works (SAZEW) has announced a significant rise in its earnings for the third quarter of the fiscal year 2026, with earnings per share (EPS) reaching Rs106.5. This marks a 3% increase year-over-year and a 60% increase quarter-over-quarter, exceeding industry expectations.
According to JS Global, the surge in profits was driven by higher-than-anticipated gross profit margins. The company's profit for the quarter amounted to Rs6.4 billion, contributing to a nine-month fiscal year profit of Rs14.9 billion, up 16% from the previous year. In conjunction with the earnings report, Sazgar declared an interim cash dividend of Rs20 per share for the third quarter, bringing the total dividend for the fiscal year to Rs50 per share, reflecting a payout ratio of 20%.
The company's net sales experienced a 29% year-over-year and 39% quarter-over-quarter increase, reaching Rs47 billion in the third quarter. This growth was primarily driven by four-wheeler sales, which rose 41% year-over-year and 48% quarter-over-quarter, totaling 5,420 units compared to 3,836 units in the same quarter last year. Three-wheeler sales also saw a rise, increasing 10% year-over-year and 9% quarter-over-quarter to 9,024 units.
Sazgar reported gross margins of 26.8% for the third quarter, surpassing expectations, though slightly down from 32.6% in the same quarter the previous year. Distribution expenses increased by 63% year-over-year and 18% quarter-over-quarter, while administrative expenses rose by 47% year-over-year. Other income saw an increase of 2.6 times year-over-year, attributed to higher treasury income.
The effective tax rate remained consistent at 39%. Despite the increased expenses, JS Global maintains a "BUY" recommendation on SAZEW, citing the company's current trading at a favorable price-to-earnings ratio.