Lahore: Millat Tractors Limited (MTL) announced its financial results for the second quarter of fiscal year 2026, revealing an unconsolidated profit of Rs2.4 billion, translating to an earnings per share (EPS) of Rs12.06. This represents a 21 percent decrease compared to the same period last year, but a substantial 4.7 times increase from the previous quarter.
According to JS Global, the company's performance exceeded expectations due to higher-than-anticipated gross margins, which surged to 35 percent in the quarter, up from 25 percent a year ago and 27 percent in the previous quarter. The company also declared a cash dividend of Rs20 per share for 2QFY26, bringing the first half fiscal year 2026 payout to 137 percent, surpassing forecasts.
Net sales for the quarter rose by 7 percent year-on-year and an impressive 2.8 times quarter-on-quarter, reaching Rs20.9 billion. This growth was largely driven by increased tractor sales, with 6,335 units sold, a 2.9 times increase from the previous quarter. However, tractor sales for the first half of FY26 fell by 16 percent year-on-year, totaling 8,512 units. The Punjab Government's Green Tractor Scheme played a crucial role in supporting these sales figures.
The report also noted a 29 percent year-on-year and 2.1 times quarter-on-quarter increase in distribution expenses, attributed to the rise in tractor sales. Meanwhile, the company's finance costs decreased by 27 percent year-on-year and 15 percent quarter-on-quarter, thanks to a reduction in short-term borrowing.
MTL recorded a tax expense of Rs2,953 million in 2QFY26, resulting in an effective tax rate of 55 percent, considerably higher than the expected 39 percent. This contrasts sharply with a tax reversal of Rs67 million in the same quarter of the previous year, bringing the first half FY26 effective tax rate to 53 percent, compared to just 7 percent in the first half of FY25.
Currently, MTL is trading at a projected price-to-earnings ratio of 18.7 for FY26 and 12.9 for FY27, reflecting market expectations for the company's future performance.
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