Shams ul Nisa

Services Industries Limited’s revenue increased 28.4% to Rs26.55 billion in the six months ending June 30, 2023, from Rs20.68 billion over the corresponding period in 2022. Similarly, the firm’s gross profit shot up by 62.56% to Rs6.26 billion in 1HCY23 from Rs3.85 billion in 1HCY22. Service Industries’ core activities are purchases, manufacture and sale of footwear, tyres and tubes and technical rubber products. This remarkable rise in revenue and gross profit reflects the higher demand of goods and effective business strategies. The gross profit ratio expanded to 23.61% in 1HCY23 from 18.65% in 1HCY22, showing better cost management by the company during this period.

The company’s operational profit surged to Rs3.53 billion in 1HCY23 from Rs1.99 billion in 1HCY22, showcasing a substantial growth of 77.41%. This signifies improved operational efficiency and better control of expenditures by the company. As a result, the profit-before-taxation surged to Rs1.34 billion from Rs746.5 million in the corresponding period of CY22, constituting a rise of 80.81%. The profit-after-tax also showed a massive 63.2% hike as the net profit surged to Rs793.4 million in 1HCY23 from Rs486.1 million in 1HCY22. The company’s net profit margin expanded to 2.99% in 1HCY23 from 2.35% in 1HCY22. The earnings per share (EPS) rose from Rs10.35 in 1HCY22 to Rs16.89 in 1HCY23.

Total Assets Analysis

The company’s better financial performance contributed to the increase in investment in long-term assets such as property, plant and equipment. The non-current assets rose from Rs22.3 billion in December 2022 to Rs24.2 billion in June 2023, posting a moderate growth of 8.61%.

The current assets grew 19.52% from Rs17.92 billion in December 2022 to Rs21.42 billion in June 2023. This shows the company has improved its liquidity position by increasing investment in short-term assets such as cash, account receivables and inventory. The company’s total assets increased by 13.47% from Rs40.24 billion in December 2022 to Rs45.67 billion in June 2023, driven by the growth of both current and non-current assets.

Total equity and liabilities analysis

As of June 2023, the company’s total equity was Rs7.81 billion compared to Rs7.27 billion in December 2022, reflecting a growth of 7.52%. This signifies that the company has accumulated additional capital during this period. The non-current liabilities showed a substantial growth of 19.38% from Rs11.65 billion in December 2022 to Rs13.91 billion in June 2023. This increase shows that the company has taken more long-term obligations to cover the capital investment and other expenditures.

The company’s current liabilities grew by 12.26% to Rs23.93 billion in June 2023 from Rs21.32 billion in December 2022. This rise is more likely because of an increase in operational activities and investment of the company during this period. Services Industries’ total equity and liabilities grew by 13.47% during the period under consideration.

Analysis of last four years financials

The Services Industries Limited followed a fluctuating trend in sales between CY19 and CY22. The highest sales of Rs42.5 billion were recorded in CY22 and the lowest of Rs24.4 billion in CY20.

On the other hand, the profit-after-taxation exhibited a decreasing trend from CY19 to CY22. The highest post-tax profit of Rs886.3 million was recorded in CY19 and the lowest of Rs354.4 million in CY22. The company’s earnings per share were the highest at Rs37.73 in CY19 and the lowest at Rs7.54 in CY22.

Credit: INP-WealthPk