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International Steels Limited announced its financial results for the first quarter of the ongoing fiscal year 2023-24 ending on September 2023, with its net profit rocketing to Rs1.11 billion from Rs448.45 million over the same period of the previous fiscal, posting a remarkable increase of 149.1%, according to WealthPK. The revenue clocked in at Rs19.2 billion, registering a 16.1% growth over Rs16.54 billion in 1QFY23. Efficient working capital management, productivity and focus on exports and domestic market opportunities resulted in significant growth in revenue and profit in 1QFY24 despite the decline in steel prices and slow economic growth.

The gross profit increased by 10.1% to Rs2.46 billion in 1QFY24 from Rs2.23 billion in 1QFY23. However, the gross profit margin slipped slightly to 12.83% in the period under review from 13.54% in 1QFY23. Meanwhile, the finance cost plunged by 77.31% reaching Rs195.68 million in 1QFY24 from Rs862.55 million in 1QFY23. The company’s other income rocketed 390% to Rs124.88 million in 1QFY24 from Rs25.46 million in 1QFY23. Similarly, the profit-before-tax soared to Rs1.77 billion from Rs494.4 million in 1QFY23, recording a huge growth of 258.60%. The net profit margin jumped to 5.82% in 1QFY24 from 2.71% in 1QFY23. As a result, the earnings per share leapt from Rs1.03 to Rs2.57 in 1QFY24.

Assets, equity, and liabilities analysis

In June 2023, the company's non-current assets were valued at Rs20.6 billion, which by September 2023 dropped to 20.4 billion, down 1.01%, according to the financial results for the quarter. The company's desire to build its assets throughout the quarter, to grow and strengthen its position financially in the market is reflected by a significant rise of 19.55% in current assets. At the end of the quarter, the total assets grew by 9.53%.  

A minor increase of 0.14% was recorded in total shareholder equity. During the period under review, the company's non-current liabilities fell by 3.51%. However, current liabilities increased by 23.70% in the first quarter that ended in September 2023. Equity and liabilities stood at Rs46.43 at the end of the quarter, compared to Rs42.39 billion in June 2023, posting a 9.53% increase. This shows that the company had the same amount of equity and liabilities as the total assets at the end of the first quarter of FY24.

Historical trend

The net sales of International Steels Limited have consistently increased, reaching a peak of Rs91.42 billion in FY22 before declining to Rs76.75 billion in FY23. Net sales stood at Rs48.08 billion in FY20 and Rs69.79 billion in FY21.  The net profit fluctuated over the four years, posting the highest of Rs7.46 billion in FY21 and the lowest of Rs494.8 million in FY20. The net profit for FY22 was Rs5.4 billion and Rs3.5 billion in FY23. This demonstrates that the business was not able to keep costs under control year-on-year to generate a respectable profit.

The steel manufacturing company recorded the highest gross profit margin of 19.33% in 2021. It declined to 13.54% in FY22 before pushing up slightly to 13.82% in FY23. The highest net profit margin of 10.7% was recorded in 2021, which fell to 4.58% in 2023. The company's earnings per share growth remained negative in 2020, 2022 and 2023, posting values of -81.37%, -27.51 and -34.97%, respectively. The company only reported positive EPS growth of 1,405.26% in 2021. 

Credit: INP-WealthPk