Sazgar Engineering revises expansion costs amid record quarterly profit

Sazgar Engineering Works Ltd. (SAZEW) announced Monday that its board of directors has approved a significant revision to the estimated cost of its expansion plan, raising it from PKR 4.50 billion to PKR 11.50 billion.

The ambitious expansion includes upgrades to the company's paint shop, the construction of new warehouse facilities, the installation of a 5.7-megawatt solar system, and the development of new manufacturing and assembly facilities for locally assembled New Energy Vehicles (NEVs).

The rollout of the completely knocked down (CKD) NEV model, initially expected by December 2025, has been rescheduled to take place before March 2026, pending government approval.

The company also reported its highest-ever quarterly profit of PKR 6.2 billion for the third quarter of FY25, equivalent to an earnings per share (EPS) of PKR 103.05.

This marks a year-on-year increase of 2.05 times and a quarter-on-quarter rise of 2.59 times, exceeding industry expectations.

The surge in profitability was attributed to higher-than-anticipated gross margins, which reached 32.6% in 3QFY25, up from 28.35% in the previous quarter and 28.97% a year earlier.

Economies of scale from increased sales volumes played a key role in this improvement, analysts said.

SAZEW's net sales rose 83% to PKR 36.7 billion, driven by strong growth in three- and four-wheeler volumes. Four-wheeler sales surged 112% to 3,686 units, while three-wheeler sales climbed 40% to 8,216 units compared with the previous quarter.

Despite the revenue growth, distribution, administrative, and other expenses also saw significant increases rising by 124%, 78%, and 105%, respectively compared with last year, in line with higher sales volumes.

In addition, the company declared a dividend of PKR 12 per share for the third quarter, bringing the total dividend for the nine months of FY25 to PKR 32 per share.