Mughal Steels (MUGHAL), margins improve but earnings still weak

Mughal Steels (MUGHAL) is expected to report profits of Rs321 million for the April–June 2025 quarter (4QFY25), which is 47% lower than last year. The earnings per share (EPS) is expected to clock in at Rs0.96.

Here’s what’s happening behind the numbers:

Positives:

• Margins are getting better: Gross margins are expected at 8%, up from 5% last year. This is due to:
  • Cheaper scrap prices
  • Lower energy and financing costs
• Sales are steady: Revenues are expected at Rs19.7 billion, almost the same as the previous quarter.

Challenges:

• The high-margin non-ferrous segment contributed less this time.
• No dividend is expected for FY25.
• Despite some improvements, full-year FY25 EPS is just Rs2.31, down 61% YoY.

Full-year performance snapshot:

• Revenue: Rs85.9bn (↓7%)
• Net Profit: Rs774mn
• EPS: Rs2.31
• No payout

Looking ahead:

There’s some hope going into FY26:

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• A new coal power plant is expected to come online in 1QFY26, which should reduce energy costs further.
• A pickup in ferrous steel demand could help improve performance.

Investment perspective:

Analysts at JS Global still have a ‘Buy’ call on MUGHAL due to its better financial position and upcoming energy efficiency projects. The stock trades at 29.1x FY25E P/E, but valuation drops sharply to 5.1x for FY26F, with a potential dividend yield of 3% next year.

Source: JS Global

⚠️ 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 →

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