By: Ismail Iqbal Securities (Pvt) Limited
Amreli Steels Limited announced its full year 2015 results in an announcement today. The steel maker managed to increase its EPS by more than three folds from PKR 1.13 in FY14 to PKR 4.54 in FY15, a rise of 302% YoY. The strong growth in EPS was mainly due to higher offtake and improved gross margins. The topline of the company improved by more than 20% YoY to PKR 14.4bn whereas gross margins improved by around 6ppts in the same period. In the fourth quarter, Amreli posted EPS of PKR 1.94/share with Net Sales of PKR 3.8bn. The company’s gross margins in the same period registered at a phenomenal 21.4% which can be primarily attributed towards the low steel prices internationally.
Topline rises on increased Steel Demand: Amreli Steels is the biggest manufacturer of Reinforcement Bars in the country with a current capacity to produce 180k tons per year. The company has been supplying its products to all the large infrastructure projects being currently undertaken in the country which include DHA, Bahria Town housing projects, Neelum-Jhelum Dam, Karachi-Lahore Motorway, etc. Hence, the rising construction and economic activity in the country has contributed towards increased demand of Amreli’s Rebars resulting in its topline increasing by 20.5% YoY to PKR 14.4bn in FY15. Going forward, the company is expecting strong growth in steel demand and hence has undertaken a capacity expansion of final product to 480k tons to be operational from end of CY16.