Hifsa Raja

Sales of Pak Elektron Limited (PEL), the maker of home appliances, increased to Rs54 million in the first nine months of the calendar year 2022 (9MCY22), up 28% from Rs42 million netted over the corresponding period of 2021. Despite rising import expenses brought on by uptick in global commodity prices and weaker local currency, the gross profit of the company increased 23% to Rs8.4 million in 9MCY22 from Rs6.8 million in 9MCY21. The profit before taxation increased to Rs2.19 million in 9MCY22 from Rs1.85 million in 9MCY21. The profit after taxation increased 9% to Rs1.49 million in 9MCY22 from Rs1.37 million in 9MCY21, reports WealthPK.

Home appliances division, which contributes 54.36% of the company’s revenues and has a market-competitive product line, is a significant revenue-generating segment. Despite the overall economic slowdown, the home appliances division grew its income by 3.96% year-over-year thanks to an effective nationwide sales and distribution network and customer-focused strategies.

Earnings growth analysis

PEL’s earnings per share have remained close to zero from 2018 to 2020. However, the EPS improved markedly in 2021. The demand for the company’s products started to recover in 2022, and the firm expects growth in its earnings in future.

Industry comparison

Pakistan Cables Limited, EMCO Industries Limited, Al-Ghazi Tractors Limited and Hi-Tech Lubricants Limited are considered to be the competitors of Pak Elektron Limited. PEL’s price/earnings ratio (PE) remained at 5.4x, with a market capitalisation of over Rs9 billion. Hi-Tech Lubricants Limited is the most overvalued company compared to its competitors, followed by Pak Elektron Limited.

Profitability

PEL profitability is demonstrated by its net profit margin and gross profit margin. The net profit margin has remained quite depressed over the past years compared to the gross profit margin, which showed some healthy growth.

PEL was incorporated in Pakistan on March 3, 1956, as a public limited company under the now repealed Companies Act, 1913. The principal activity of the company is manufacturing and sale of electrical capital goods and domestic appliances. The company is organised into two divisions - power and appliances.

Credit: Independent News Pakistan-WealthPk