Staff Report:
Millat Tractors Limited (MTL) announced its 4QFY24 result, with a recorded profit of Rs2.06bn (EPS of Rs10.73), up 65% YoY. However, the result came in lower than industry expectations.

This brings FY24 earnings to Rs9.9bn (EPS of Rs51.7) compared to FY23 profit of Rs3.4bn (EPS of Rs17.61), marking a 2.94x YoY increase.

MTL did not announce a final cash dividend, falling short of industry expectations due to the pending approval of the merger scheme between MTL and Millat Equipment Limited (MEL) by the Lahore High Court (LHC). According to the merger scheme, MTL is not permitted to pay any dividends until the LHC grants approval.

The FY24 total payout stands at Rs25/share, already paid in 2QFY24.

Net sales rose by 58% YoY but fell 12% QoQ to Rs21.9bn in 4QFY24, driven by units sold. A total of 7,110 units were sold in 4QFY24 compared to 4,847 units in 4QFY23 and 7,994 units in 3QFY24.

Gross margins stood at 20.69% for 4QFY24, which was below expectations. This marks a decrease from 25.43% in 4QFY23 and 22.66% in 3QFY24. Gross margins rose from 20% to 23% from FY23 to FY24.

Distribution expenses surged by 42% YoY but declined by 51% QoQ to Rs311mn in 4QFY24. Administrative expenses increased by 48% YoY and remained stable QoQ at Rs329mn in 4QFY24.

Other income decreased by 60% YoY and 87% QoQ to Rs41mn in 4QFY24. However, for FY24, other income totaled Rs1.04bn, reflecting a 120% YoY rise.

The effective tax rate stood at 43% for 4QFY24, compared to 35% in 3QFY24 and 51% in 4QFY23.

The company is currently trading at an FY25E PE of 9.08x and a dividend yield of 7%.