Hifsa Raja

Amreli Steels Limited’s revenue climbed 56% to Rs42.53 billion in the first nine months of the fiscal year 2021-22 (9MFY22) compared with Rs27.22 billion in the corresponding period of the fiscal 2020-21. Similarly, its gross profit grew 57% to Rs5.09 billion in 9MFY22 from Rs3.25 billion during the corresponding period of FY21.

The operating profit also increased 68% to Rs3.61 billion compared to Rs2.15 billion previously. Profit-before-tax increased 128% to Rs2.11 billion in 9MFY22 from just Rs0.927 billion in in 9MFY21. The net income increased 98% to Rs1.83 billion in 9MFY22 compared to Rs0.925 billion over the corresponding period of FY21. Earnings per share increased 98% to Rs6.18 in 9MFY22 as compared to Rs3.12 in 9MFY21, reports WealthPK.

As of June 30, 2022, directors and their spouse(s) and minor children owned 56.47% of the company’s shares. Associated companies owned 18.76% of the shares. Banks, development finance institutions, non-banking finance companies, insurance companies, Takaful, Modarabas and pension funds owned 5.25% of total shares. General public owned 16.33% of the shares. And ‘others’ held 3.14%. Some foreign companies had 0.05% of the company’s shares till June 30, 2022.

Financial Performance

During the fiscal year 2020-21, the company generated net sales of Rs39.21 billion over Rs26.53 billion in 2019-20, registering an increase of 48%. The gross profit for FY21 was Rs4.54 billion, up 151% from Rs1.81 billion in FY20. Operating profit for FY21 was Rs3.0334 billion compared to Rs0.356 billion in FY20, posting an increase of 751%. Profit-before-tax for FY21 was Rs1.38 billion, as compared to the loss of Rs1.93 billion in FY20, posting a decrease in loss by 171%. Net income increased to Rs1.36 in FY21 from a loss of Rs1.242 billion in FY20.

Earnings Per Share

The company’s earnings per share maintained a mix trend from 2016 to 2018 before plunging to Rs0.11 in 2019 and further dipping to minus Rs4.18 (loss per share) in 2020. However, the earnings per share rebounded, regaining the losses to settle at Rs4.16 in 2021.

Ratio Analysis:

In 2017, the gross profit margin reached a record high of 18.58%, indicating the management did an excellent job in maintaining a balance between generating revenues and cost of providing products and services. The net profit margin demonstrated a profitability of 8.09% after deducting all other taxes. The return on equity (ROE) was 9.64%, again demonstrating successful management in delivering a return on investments. In 2018, Amreli Steels’ gross profit margin, net profit margin and ROE reached 17.80%, 10.23% and 12.31%, respectively, indicating a good financial performance by the company.

In 2019, the gross profit margin fell to 8.48%, net profit margin dropped to 0.11% and ROE plunged to 0.27%, indicating the incurrence of costs other than costs of goods sold. The same pattern continued during the Covid-19 pandemic year of 2020. However, the profitability increased in 2021. The ROE also jumped to 9.81% in 2021. The EBITDA (earnings before interest, taxes, depreciation and amortisation) margin shows the operational efficiency of the company. The higher EDITDA margin in 2017 and 2018 shows low operational expenses, whereas as in the next two years, 2019 and 2020, it shows that the operational expenses increased, which ultimately reduced the profitability. In 2021, EBITDA increased.

The debt-to-equity ratio shows that that company had debt of 0.06% in 2017, which increased to 0.17% in 2018. In 2019, the debt decreased to 0.12%. The ratio was 0.50% in 2020 and 0.35% in 2021. The price-to-earnings (PE) ratio (times) was 31.27 times in 2017, which shows a high expectation for future growth. PE ratio decreased the next year. In 2019, the ratio increased by 223.14 times. In 2020, there was a sudden decrease in PE ratio, showing a low stock market value of Amreli Steels. In 2021, the stock value increased 9.43 times.

Profit or Loss over the Years:

Profitability remained high in 2017 and 2018, whereas in 2019 and 2020, both gross and operating profits decreased, which also decreased the profitability. In 2021, the gross profit, operating profit and net income increased.

Independent News Pakistan-Wealthpk