Mughal Iron & Steel (MUGHAL): Power Savings & Growing Market Share

Mughal Iron & Steel (MUGHAL) is gearing up for an exciting phase, with two big developments that could reshape its profitability in the coming years: a new coal-fired power plant and a stronger position in the steel market.

Cost savings from the new power plant

MUGHAL’s subsidiary, Mughal Energy Limited, is setting up a 36.5MW coal-fired power plant. This is not just about adding power; it’s about reducing costs in a big way.

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Currently, electricity from the grid costs around PKR 35 per unit. With the new plant, this cost could drop to PKR 27-28 per unit starting FY26. That’s a major saving!

Over the next 5 years, these savings are expected to add 30% to earnings, which means an average of PKR 4.3 per share. More importantly, it will improve margins in the ferrous (steel) business by 3–5%, pushing overall margins to the 10–11% range.

Stronger grip on the steel market

MUGHAL isn’t just saving money; it’s also growing its market share.

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In the past, the company held about 5% share in the long steel market. But in FY24 and FY25, this climbed to 7–8%, and analysts expect it to stay in this range going forward, averaging 7.8% over the next 5 years.

What’s driving this?

• A strong distribution network
• The high-margin copper business
• Smart working capital management

While much of the steel industry is struggling at low capacity, MUGHAL is running at 55–60% utilization and could scale up to 70% by FY30.

Why does this matter for investors?

With lower power costs and a bigger market share, MUGHAL is setting itself up for steady growth in earnings and margins. For investors, this makes the stock an interesting long-term play in Pakistan’s steel sector.

Source: Arif Habib Limited

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →