Agha Steel Announces Healthy Financial Results

Karachi (Muhammad Yasir) Agha Steel Industries has announced its financial results for the half year ended on 31st December 2020.

Company has announced a total profit after tax of 1057 million for half year while its October to December’s Quarter after tax profit remained Rs. 548 million. 

The earning per share for the half year remained Rs. 2.13 vs the last year’s  corresponding period EPS of Rs.1.95. The current quarter’s EPS remained Rs. 1.11 compared with the last quarter EPS of Rs. 1.11,  despite the addition of 120,000,000 shares to the share capital of the company,  the EPS remains the same.

Company’s total gross sales for the 6 months remained Rs. 12,026 million while quarterly gross sales remained  Rs. 6 136 million.

Agha Steel’s half yearly results clearly reflects a progressive trend of the company. During the period, the Company posted exemplary standards while raising equity with in the industry by achieving(1.6x) oversubscription of its recently floated IPO.

The equity raised amounted to Rs 3.84 Billion from institutional investors, high net worth individuals and general public. The capital generated through this IPO is being used for installing the world acclaimed Mi.Da Technology, for which approximated 50% of the work is already completed till the period already ended Dec 31, 2020,  at the AGHA plant located at Port Qasim.

 This Mi.Da technology will make AGHA one of the most technologically advanced steel manufactures not only in Pakistan but in Asia.

Net profit Margin for AGHA has been 10.2% for the period under review, which is mainly due to the 45% (YoY comparison) reduction in interest cost, but a decline in the GP margin for the period was observed mainly due to the exorbitant increase in international scrap prices as well as Increase in electricity tariff. However, to reduce the effect of electricity tariff, AGHA commenced installation of a pilot project of Solar Power of 2.25 MW in anticipation of attaining 100% green renewable energy in future.

One of the significant highlight for the said period is the reduction in the Cash Operating Cycle for the company which has been substantially reduced from 179 days to 51 days on YoY basis, which is a step in the right direction for any manufacturing corner.

An astounding surge in sales was witnessed where by the sale soared by 46% as compared to last year, these sales we mainly attributed to increase in market share achieved through Retail segment penetration and setting up Regional Sales offices which has opened up new avenues for the company.

During the period VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Agha Steel Industries Limited (AGHA) from ‘A-/A-2’ (Single A Minus/A-Two) to ‘A/A-2’ (Single A/A-Two). Outlook on the assigned ratings is ‘Stable’. The said entity upgrading, re-affirms company balance sheet strength & strong fundamentals, duly accredited by independent third party credit rating agency.

AGHA was reported amongst successful suppliers that got enlisted for supplies at 3 of the major Dam Projects of Federal Government of Pakistan including, Mohmand, Dasu & Diamer Bhasha Dam, at the same time the company also got enlisted at Military Engineering Services as manufacturer cum supplier of deformed bars for their upcoming projects, supplies for these projects will significantly increase sales for AGHA in near future, as the construction of dams will require sizable quantity of steel, which AGHA will be able to provide with its new Mi.Da plant.

AGHA which prides itself for being technology leader also intend to reach the best HR practices in the industry. Keeping that vision intact, the company recently on boarded top professionals from relevant industries at the posts of Chief Operating Officer, Chief Sales & Marketing Officer and a separate Chief Operating Officer of their Air Separation Unit. These highly skilled professionals bring industrial exposure and experience along with them which is going to add value in AGHA’s growth at a much faster pace in the near future.

So overall AGHA is all set to achieve greater heights in the coming future, with a massive construction industry boom to look forward to. Once housing projects begin, along with the construction of dams, demand for rebars would shoot and AGHA seems well-prepared to meet these demands.