Sazgar Engineering Works Limited (PSX: SAZEW) has announced impressive financial results for the first quarter of the fiscal year 2025, reporting earnings of Rs. 4.2 billion, translating to an earnings per share (EPS) of Rs. 69.77. This marks a substantial year-on-year increase of 541% and a quarter-on-quarter rise of 21%.
In a notable development, the company declared a dividend of Rs. 10 per share for 1QFY25, marking its first-ever dividend announcement for this period.
The company’s net sales surged by 3.3 times year-on-year and 14% quarter-on-quarter, reaching Rs. 26.3 billion. This growth was primarily driven by increased sales of the Haval variants, as highlighted by Topline Securities.
Sazgar Engineering recorded significant growth in both three- and four-wheeler sales during 1QFY25. Four-wheeler sales reached 2,605 units, representing a 3.5 times increase year-on-year and an 18% rise quarter-on-quarter. Meanwhile, three-wheeler sales climbed to 5,435 units, marking an 89% year-on-year and 9% quarter-on-quarter increase.
The company achieved its highest monthly four-wheeler production in September 2024, alongside its second-highest sales. With strong demand for Haval vehicles and ongoing CBU testing for the Tank and Ora models, Sazgar’s four-wheeler sales and production are expected to continue driving growth.
Gross margins for 1QFY25 stood at 28.94%, slightly down from 29.13% in 4QFY24 but significantly higher than the 18.78% recorded in 1QFY24.
Distribution expenses in 1QFY25 increased by 155% year-on-year but decreased by 5% quarter-on-quarter to Rs. 740 million. Administrative expenses rose by 64% year-on-year and 3% quarter-on-quarter to Rs. 123 million.
Other income saw a 4.1 times year-on-year increase but fell 16% quarter-on-quarter to Rs. 403 million in 1QFY25.
The effective tax rate for 1QFY25 was 36%, compared to 40% in 4QFY24 and 41% in 1QFY24.
Topline Securities maintains a buy stance on SAZEW, with the stock currently trading at a forecasted price-to-earnings ratio of 3.95x for FY25 and 3.26x for FY26, and offering a dividend yield of 6% and 8%, respectively.
