By: WE Financial Services Limited
In our today’s morning briefing we would discuss the performance of Nishat Chunian Limited (NCL) in 1QFY16 along with recommendation to the investors.
55% YoY lower losses: Though the company faced loss due to unpredicted depreciation of Pak Rupee which resulted in forex loss and absence of dividend from associated companies, but the loss was reduced on back of better performance of weaving segment along with lower finance cost and other income. The loss after taxation (LAT) of the company totaled Rs 108 million (LPS: Rs 0.54) in 1QFY16 which is 55% YoY less from a LAT of Rs 238 million (LPS: Rs 1.19) in 1QFY15. We expect company to post strong growth in earnings as profit after tax to clock at Rs 526 million (EPS: Rs 2.20) in 2QFY16.
Higher revenue results in better gross profit: The net revenue of the company hike 10% YoY in 1QFY16 totaling Rs 5,824 million as against net revenue of Rs 5,310 million in the identical period in FY15. This was on back of improved business of the weaving segment. The cost of sales also surge by 10% YoY during the period under review to Rs 5,386 million versus Rs 4,904 million in 1QFY15. Therefore gross profit elevated 8% YoY in 1QFY16 to Rs 438 million in 1QFY16 as compared to a gross profit of Rs 406 million in 1QFY15. The gross profit margin however reduced to 7.5% in 1QFY16 versus 7.6% in 1QFY15.