Insight Securities (Private) Ltd (ISL) has just released an update on its coverage of DG Khan Cement Company Limited (DGKC) stock. The research house has raised its Dec 24 target price to Rs. 152 per share.
The company has reported unconsolidated Profit After Tax (PAT) of PKR1.2bn, translating to Earnings Per Share (EPS) of PKR2.7. This result surpasses expectations, primarily due to higher gross margins than anticipated.
During the third quarter of fiscal year 2024, the company’s revenue declined by 22% year-on-year and quarter-on-quarter to PKR14.3bn. This decrease is mainly attributed to lower dispatches.
The gross margins witnessed a significant increase of approximately 7 and 13 percentage points year-on-year and quarter-on-quarter, respectively. This rise could be attributed to an efficient fuel mix and lower coal prices, although further clarification is awaited.
Distribution expenses decreased by 23% and 40% year-on-year and quarter-on-quarter, respectively, due to reduced dispatches. Meanwhile, administrative costs increased by 40% year-on-year and 4% quarter-on-quarter due to inflationary pressures.
DG Khan Cement Company Limited (DGKC) has recently released its financial results for the third quarter of fiscal year 2024. Let’s take a closer look at the key financial metrics:
| Financial Metrics (PKRmn) | 3QFY24 | 3QFY23 | 2QFY24 | YoY | QoQ | 9MFY24 | 9MFY23 |
|---|---|---|---|---|---|---|---|
| Net Sales | 14,266 | 18,282 | 18,267 | -22% | -22% | 49,051 | 48,044 |
| Cost of Sales | 10,623 | 14,802 | 15,937 | -28% | -33% | 39,863 | 40,306 |
| Gross Profit | 3,644 | 3,480 | 2,330 | 5% | 56% | 9,187 | 7,738 |
| Gross Margin | 26% | 19% | 13% | 19% | 16% | – | – |
| Admin Cost | 307 | 219 | 295 | 40% | 4% | 887 | 767 |
| Distribution Cost | 414 | 539 | 693 | -23% | -40% | 1,616 | 926 |
| Other Income | 1,013 | 756 | 1,337 | 34% | -24% | 124 | 160 |
| Financial Charges | 1,957 | 1,673 | 2,028 | 17% | -4% | 6,073 | 4,876 |
| Profit Before Tax (PBT) | 1,921 | 1,767 | 660 | 9% | 191% | 3,664 | 3,157 |
| Taxes | 740 | 586 | 266 | 26% | 178% | 1,429 | 1,044 |
| Profit After Tax (PAT) | 1,180 | 1,180 | 394 | 0% | 200% | 2,235 | 2,112 |
| Earnings Per Share (EPS) | 2.69 | 2.69 | 0.90 | 5.10 | 4.82 | – | – |
Other income increased to PKR1bn, marking a 34% year-on-year increase, primarily due to higher dividend income.
However, finance costs rose by 17% year-on-year to PKR1.95bn due to elevated interest rates and higher debt levels, although they decreased by 4% quarter-on-quarter.
The information in this article is based on research by Insight Securities (Private) Ltd (ISL). All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
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