MUGHAL announces Q1 financial results

JS Research has just released an update on the recent quarterly results expectations for Mughal Iron and Steel Ltd. (MUGHAL). Let’s delve into the key insights from the quarter earnings announcement:

Overview of MUGHAL’s Performance

Mughal Iron and Steel Ltd. (MUGHAL) is anticipated to face challenges in the third quarter of FY24. The company’s gross margin trend is expected to continue declining due to higher electricity costs, which form a significant portion of its production expenses. Additionally, absence of any inventory gains further adds to the pressure on margins.

Expectations for 3QFY24

Gross Margins and Volumes

The Board of MUGHAL is set to discuss the 3QFY24 results on April 30, 2024. It is expected that lower volumes from the Non-ferrous division, attributed to Chinese holidays, will lead to a decline in gross margins, likely around 10%. The company is also expected to grapple with higher power costs.

Operating Margins

Operating margins for the quarter are projected to clock in at 8.6%, marking a 0.5-percentage-point decrease quarter-over-quarter (QoQ).

Metric (Rs mn)	3QFY24E	3QFY23	YoYΔ	2QFY24	QoQΔ	9MFY24E	YoYΔ
Net Sales	22,825	17,239	+32%	25,017	-9%	68,875	+42%
Gross Profit	2,215	3,253	-32%	2,506	-12%	7,239	+9%
PAT	370	1,305	-72%	773	-52%	1,659	-37%
EPS (Rs)	1.10	3.89	-72%	2.30	-52%	4.94	-37%
DPS (Rs)	0.00	0.00	0.00	0.00	0.00	0.00	0.00

Other Expectations

Finance costs are expected to amount to Rs1.5 billion. Net margins are projected to decrease by 1.5 percentage points on a sequential basis to approximately 1.6%.

Overall, MUGHAL is expected to post an EPS of Rs1.1 for 3QFY24, marking a 52% decrease QoQ. No dividends are expected from the company in this quarter.

Conclusion

As MUGHAL navigates through challenges such as declining gross margins and higher power costs, its performance in the third quarter of FY24 is closely watched. The company’s ability to manage expenses and maintain profitability will be key factors to monitor.

Disclaimer

The information in this article is based on research by JS Research. 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.