Lahore: Nishat Mills Limited (NML) reported an unconsolidated profit of Rs2,574 million for the second quarter of fiscal year 2026, translating to earnings per share (EPS) of Rs7.32. This figure marks a 20% decrease from the same period last year but a significant increase of 3.3 times over the previous quarter, surpassing market expectations.
According to JS Global, the financial results were bolstered by a tax reversal recorded during the quarter, offsetting a decline in gross margins. The company reported a tax reversal of Rs1.1 billion, contrasting with a tax expense of Rs1.7 billion in the same quarter of the previous year. This change resulted in a reported tax reversal of Rs94 million for the first half of fiscal year 2026.
Despite a 9% year-over-year and 7% quarter-over-quarter decline in net sales, which amounted to Rs42 billion, the company managed to exceed earnings projections. Gross margins fell to 9.4% in the second quarter, down from 12.6% the previous year, and lower than anticipated 11.7%.
The company's other income decreased by 45% year-over-year but rose 35% from the previous quarter to reach Rs2.1 billion. Meanwhile, finance costs increased by 4% year-over-year and 12% quarter-over-quarter to Rs1.9 billion, which was above expectations.
For the first half of fiscal year 2026, Nishat Mills reported earnings of Rs3.35 billion (EPS: Rs9.52), a decline of 19% from the previous year, attributed mainly to reduced gross margins and lower other income. Gross margins for the first half settled at 10.2%, compared to 11.8% the previous year, with other income falling 41% year-over-year to Rs3.6 billion.
Nishat Mills Limited is currently trading at an estimated price-to-earnings ratio of 9.3 for fiscal year 2026 and 7.9 for fiscal year 2027.
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