Key Takeaways:
• Tractor industry sales expected between 2.5-4k per month in 6 months’ time.
• Impact of green tractor scheme has begun.
• Cash flow situation is improving for BCL
Bolan Castings Limited reported earnings per share of PKR 10.34 in FY24 against loss per share of PKR 2.16 in FY23. Total revenue in FY24 reached PKR 3.39 Bn against PKR 2.17 Bn in FY23, an increase of 57%. The company saw its gross margin surge from 10% in FY23 to 17% in FY24.
The tractor sector is facing liquidity issues due to sales tax refunds not being processed. On the other hand, sales are expected to improve with the launch of Green Tractor Scheme in Punjab.
Management expects the net impact of these developments to be positive for the company’s bottom line. Due to low demand in 1QFY25 the gross margin dropped to 1% compared to 12% in SPLY. As a result, management launched cost cutting initiatives such as more procurement of local materials in place of imports. As such, it expects margins to normalize in the subsequent quarters as demand returns. Going forward, the management is hopeful of higher tractor sales with industry sales expected to be between 2,500 to 4,000 units per month in 6 months’ time
Important Disclosures
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