Sazgar profit jumps 67% year on year in FY26 second quarter

Sazgar Engineering Works Ltd. reported a sharp year-on-year rise in profit for the second quarter of fiscal 2026, though earnings declined sequentially and came in below expectations due to weaker margins and higher selling expenses.

The automaker posted net profit after tax of PKR 4.9 billion for the quarter ended December, up 67% from a year earlier but down 9% from the previous quarter. Earnings per share stood at PKR 66.56.

For the first half of FY26, profit rose 27% year on year to PKR 8.4 billion, or PKR 139.64 per share.

Sazgar declared a cash dividend of PKR 15 per share for the quarter, taking its total payout for the first half to PKR 30 per share.

Quarterly net sales climbed 85% from a year earlier to about PKR 34 billion, broadly in line with expectations, driven by a surge in four-wheeler volumes.

Vehicle sales rose 94% year on year to 3,653 units, supported by the mid-August launch of the Haval H6 plug-in hybrid electric vehicle. On a sequential basis, volumes increased about 3%.

Despite strong sales growth, gross margins slipped to 24% from 28% a year earlier and about 25% in the prior quarter, reflecting the absence of concessionary duties on the Haval PHEV and contributing to earnings coming in below forecasts.

Selling and distribution expenses rose sharply, increasing 91% year on year and 52% quarter on quarter to PKR 1.5 billion, likely reflecting heavier marketing and promotional activity amid intensifying competition in Pakistan’s auto sector. Administrative expenses also rose 91% year on year.

Other income more than doubled from a year earlier to PKR 709 million, helped by higher cash and cash equivalents, which were up 90% year on year. However, the quarter-on-quarter increase in other income came despite a decline in cash balances to PKR 25.3 billion from PKR 31.3 billion, a trend analysts said warrants further clarity.

Finance costs increased 30% from a year earlier and 52% from the previous quarter to PKR 120 million, driven by higher short-term borrowings that rose to PKR 3.3 billion from nil in the prior quarter. The effective tax rate stood at 39%, unchanged from the previous quarter but lower than 43% a year earlier.

For the first half of FY26, Sazgar’s net revenue rose 52% year on year to PKR 67.8 billion.

Analysts said earnings appeared to have flattened sequentially as growth in four-wheeler volumes slowed and costs rose.

However, they expect capacity expansion and the planned launch of new models, including the Tank 500 and Cannon Alpha, to support faster volume growth in coming quarters.