Sazgar Engineering Exceeds Expectations with Strong Financial Performance

Lahore: Sazgar Engineering Works Limited (SAZEW) reported a robust financial performance for the first quarter of fiscal year 2026, surpassing industry expectations. The company announced a profit of Rs4.4 billion, translating to earnings per share (EPS) of Rs73.06, marking a 5% increase year-over-year. This growth was supported by higher-than-anticipated gross margins.

The company achieved gross margins of 25.2% for the quarter, exceeding prior expectations of 22.1%. Although there was a slight decline from 28.94% in the same quarter last year, the margins remained stable quarter-over-quarter despite the introduction of a 2% electric vehicle adaptation levy.

SAZEW also declared a dividend of Rs15 per share, reflecting a payout ratio of 20.5%. The company’s net sales surged by 28% year-over-year to Rs33.8 billion, driven by a significant increase in four-wheeler volumes, which rose by 37% compared to the previous year.

The launch of the HAVAL H6 plug-in hybrid electric vehicle (PHEV) in August contributed to the increase in sales, with total four-wheeler sales reaching 3,557 units, up from 2,605 units in the same quarter last year. Conversely, sales of three-wheelers decreased by 2% year-over-year.

Distribution expenses increased by 30% year-over-year, while administrative expenses rose by 68%. Other income saw a significant rise of 27% year-over-year, attributed to an increase in cash and cash equivalents, leading to a cash and bank balance of Rs31.3 billion, an all-time high for the company.

The effective tax rate for the quarter stood at 39%, up from 36% in the previous year. Analysts maintain a “BUY” recommendation for SAZEW, noting its competitive trading price-to-earnings ratios for the upcoming fiscal years.