Key Takeaway:
Management Projects Demand Growth in FY25 with Plans to Resume Dividends
24, to 14% through SRO 1643 (I) / 2024 is expected to take the company out of the refund regime, thus easing out the working capital management. In FY24, local revenue reached PKR 85.13 billion, with trading goods at PKR 1.70 billion and other income at PKR 670.61 million.
Export revenue amounted to PKR 3.84 billion, trading goods at PKR 159.20 million, and other exports at PKR 6.47 million. Total industry sales grew by 47%, reaching 45,494 units from 30,942 units, spurred by post-flood reconstruction, favourable policies, and the Kisaan package.
MTL’s sales increased by 64% to 30,620 units, securing a 66% market share. Export sales rose 66% YoY to 2,761 units. During FY24, IPD sales were PKR 486 million, while spare parts and aftermarket revenue totaled PKR 2.4 billion. Management attributed recent sales slowdown to sales tax refund delays from the FBR, farmer liquidity issues from low crop prices, and Green Tractor scheme delays.
MTL received a 5,800-tractor allocation under the Punjab Green Tractor Scheme, with deliveries expected by January 2025. Export markets include Afghanistan and Africa. In the 954-tractor case, MTL deposited the principal amount with the High Court, releasing it from the obligation to deliver the disputed tractors.
However, the case remains under judicial review as the claimants continue their legal pursuit. MTL’s distribution network includes 89 main dealers, 73 parts dealers, and 587 workshop dealers across Pakistan. The company’s subsidiary, TIPEG Intertrade DMCC in Dubai, reported sales of AED 25 million, distributing a dividend of PKR 45 million to MTL.
Additionally, MIPL and MEL contributed dividends of PKR 99 million and PKR 336 million, respectively, while BCL did not declare a dividend. BWL announced a PKR 17 million dividend to MTL. For component sourcing, the average local content for tractors was 92%, with 8% imported. For LHP, it was 95% local and 5% imported, while HHP had a 90% local and 10% imported composition. Going forward, management forecasts demand growth in FY25 and aims to resume dividends. The resolution of PKR 8 billion in sales tax refunds remains a key challenge for MTL.
Important Disclosures
Disclaimer: This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.
