SAZEW Earnings in 4QFY25 Likely to Go up 30%

Staff Report

Islamabad: Topline expects Sazgar Engineering (SAZEW) to post earnings of Rs74.99/share during 4QFY25, up 30% YoY while down 27% QoQ. Alongside this, we also expect company to declare dividend of Rs15/share based on payout ratio of 20%.  This will take FY25 earnings to Rs287.6, up 119% YoY.

During 4Q, company is expected to witness 23% YoY increase in sales led by 28% YoY increase in four wheelers sales. While on QoQ basis, four wheelers unit sales is down 24% due to high base effect of Jan 2025 sales amidst year end effect.

We expect company to report gross margins at 31% during 4QFY25 due to relatively stable currency and stable sales price in 4 wheelers segment, taking FY25 gross margins to 30.6% compared to 27.1% in FY24.

FY26 Budget Positive For Stock Market: Analysts 

Topline has expected company to declare 4Q dividend of Rs15 per share, taking FY25 dividend to Rs47 (payout ratio: 16.3%).

Earnings revised up for FY27-28: We have also revised up our earnings forecast of SAZEW for FY27-29F on average by 14%, respectively, after incorporating expected launch of PHEV vehicles before Mar 2026.

Topline has revised up unit sales forecast of the company by 9% in FY26-28 to 12k, 15k, and 15.75k units respectively. Our unit sales forecast now assumed monthly sales of 1,250 units, including 250-300 monthly units of PHEV in FY27.

We now expect company to post EPS of Rs227, Rs266, and Rs295 per share in FY27, FY28, and FY29, respectively. Our estimated gross margins for the same years are 17.0%, 17.2% and 17.4%, respectively,” Topline said adding that the gross margins are anticipated to come down in FY27 from FY25 level of 30.6% as benefits under auto policy 2021-2026 are set to expire by Jun 2026.

Topline has maintain our BUY stance on company with Jun-26 target price of Rs1,667/share, suggesting total return of 40% including dividend yield of 4%.  The company is currently trading at FY26/FY27/FY28F PE of 4.02/5.38/4.60x.