Ghandhara Industries Limited Holds 42million Shares outstanding which are held by 8166 shareholders.

As of June 30, 2024, GHNI has a total of 42.609 million shares outstanding which are held by 8166 shareholders.

Ghandhara Industries Limited

Associated companies, undertaking, and related parties have the majority stake of 58.82 percent in the company followed by the local general public holding 29.62 percent shares.

The remaining shares are held by other categories of shareholders.

Financial Performance (2019-24)

GHNI’s topline posted year-on-year growth in 2021, 2022, and 2024 while the remaining years witnessed a decline in net sales. Its bottom line drastically fell in 2019 followed by a net loss recorded in 2020. G

HNI’s bottomline recovered in 2021 and 2022 only to slump again in 2023.

In 2024, GHNI’s net profit tremendously improved. Its margins followed a downward journey until 2020 and then rebounded in 2021. In 2022, GHNI’s margins tumbled again.

In 2023, gross and operating margins inched up while net margins continued to erode. GHNI’s margins attained their optimum level in 2024 (see the graph of profitability ratios).

The detailed performance review of the period under consideration is given below.

In 2019, GHNI’s topline registered a 17 percent year-on-year fall. The truck and bus market in Pakistan also saw sales volume plummet 33 percent year-over-year as it stood at 6763 units for the year. This resulted from the slow momentum of the CPEC, higher global steel prices, a decline in the value of the Pak Rupee, and a halt in government spendings during 2019.

Following the trend in the market, GHNI also sold off 3018 trucks and buses in 2019- down 25 percent YoY. However, on the positive side, the company expanded its portfolio and introduced the pick-up truck “D-MAX” in 2019. The company sold 391 units of its pick-up trucks in 2019. Due to low demand and production of trucks and buses, the cost of sales declined by 9.9 percent year-on-year in 2019. This led to a 48.52 percent year-on-year decline in gross profit with GP margin declining from 18.55 percent in 2018 to 11.51 percent in 2019. Distribution and administrative expenses also declined by 8.41 percent and 22.76 percent respectively in 2019.

This was on account of lower sales commission as well as lower payroll expenses respectively in 2019. GHNI also reduced its employee base from 738 employees in 2018 to 611 employees in 2019 on account of curtailed operations due to weak demand. Operating profit eroded by 59.30 percent year-on-year in 2019 with OP margin narrowing down from 13 percent in 2018 to 6.40 percent in 2019. Finance costs magnified by 237.7 percent year-on-year in 2019 on account of higher discount rates and increased borrowings particularly to finance imported merchandise. As a result, net profit declined by 95.60 percent year-over-year in 2019 to stand at Rs.59.95 million with EPS of Rs.1.41 compared to EPS of Rs.31.98 reported in 2018. NP margin also drastically declined from 8.12 percent in 2018 to 0.43 percent in 2019.

The truck and bus industry already battling weak demand owing to weak economic activities, high international prices of raw materials, Pak Rupee devaluation, high home-grown inflation, and high finance costs, had the double whammy of COVID-19 strike in 2020 which further dented the sales volume as it dropped by 46% year-over-year to stand at 3647 units in 2020. GHNI sold 1700 units of trucks and buses in 2020, down 44 percent year-on-year.

Conversely, the sales volume of its newly launched pick-up trucks improved by 68 percent year-on-year to clock in at 656 units. GHNI’s topline nosedived by 15.25 percent year-on-year in 2020; however, its cost couldn’t fall by a similar magnitude as its sales due to the rising cost of raw materials and Pak Rupee depreciation. As a result, gross profit thinned down by 56.75 percent year-on-year in 2020 with GP margin inching down to 5.88 percent.

Distribution expense declined by 7.7 percent year-on-year in 2020 on account of lower sales commissions incurred during the year. Whereas, administrative costs rose by 1.74 percent in 2020 with the increase in payroll cost due to the addition of 621 employees in 2020. GHNI incurred an operating loss of Rs.41.49 million in 2020. Finance cost increased by 29.26 percent year on year mainly due to the increase in the discount rate till March 2020 along with increased borrowings during the year that deteriorated its financial performance. This translated into a net loss of Rs.1282.88 million in 2020 with a loss per share of Rs.30.11.

In 2021, the truck and bus industry thrived and registered a 19 percent year-on-year rise in its sales volume which clocked in at 4347 units. As the overall business environment gathered pace because of easing off of the lockdown, hardening of Pak Rupee, and various economic stimulus packages the government had begun, the customer confidence which had gone askew, started regaining its pace and investing once again in the automobile sector.

In the year, truck and bus sales by GHNI were 2020 units – up 19% year-over-year. On the other hand, sales volume of pick-up trucks declined by 52 percent year-over-year to stand at 316 units in 2021. This helped the company’s topline escalate by 27.24 percent year-over-year in 2021.

Cost of sales increased by 16.48 percent year-over-year in 2021. Pak Rupee’s appreciation kept cost under control during the year. On account of stronger local currency and upward revision in prices of trucks & buses, the gross profit of GHNI went up by 199.53 percent in 2021 with GP margin increasing to 13.83 percent. Distribution expense increased by 15.49 percent in 2021 mainly on account of higher salaries as well as a considerable hike in late delivery charges.

Administrative expenses also increased by 29.27 percent in 2021 on account of increased payroll cost as the headcount increased to 681 in 2021. Increased sales of scrap besides profit on saving accounts and term deposits contributed to the increase of other income by a whopping 243.71 percent in 2021.

However, this was more than offset by a year-on-year increase of 488.53 percent in other expenses on account of increased provision for profit related provisioning besides provision booked for doubtful debts, deposits and advances in 2021. GHNI was able to overcome operating losses in 2021 and registered a healthy operating profit of Rs.1204.28 million. Finance cost also gave a breather in 2021 as it contracted by 51.97 percent year-on-year due to a lower discount rate. GHNI posted a net profit of Rs.604.21 million in 2021 with EPS of Rs.14.18 and NP margin of 4 percent.

In 2022, GHNI’s topline registered a staggering 61.77 percent year-on-year escalation. This was backed by both price revisions and improved volumes. During the year, the company sold 3016 units of trucks and buses, up 49 percent year-on-year. Off-take of pick-up trucks also rose by 50 percent year-on-year and clocked in at 473 units in the calendar year 2022. Overall truck and bus sales volumes also showed a 49 percent year-on-year rebound clocking in at 6498 units during 2022. It had been because of this upward trend witnessed in the country’s economy in the first three quarters of the calendar year 2022.

The sales costs increased by 64.86 percent year-on-year for calendar year 2022 because the depreciation of the Pak Rupee stood severe and the commodity prices took up a rise. Gross profit grew by 42.53 percent year-on-year in 2022; however, GP margin marched down to 12.19 percent. The company was able to maintain its administrative expense at last year’s level as the number of employees slumped to 657 in 2022.

On the contrary, distribution expense mounted by 69.20 percent year-on-year in 2022 on account of a massive hike in sales commission. Operating profit grew by 32.24 percent year on year in 2022, however, OP margin slid to 6.56 percent. Despite monetary tightening, GHNI managed to reduce its finance cost by 3.14 percent in 2022 through effective utilization of its borrowing lines. Hence, its net profit grew by 20.57 percent year on year in 2022 to reach Rs.728.50 million with EPS of Rs.17.10. NP margin slid to 3 percent in 2022.

In 2022, economic and political shock waves, triggered at the end, snowballed into 2023. High inflation, Pak Rupee deprecation, rocketing commodity prices, import restrictions, and increase in energy tariffs as well as the discount rate put their mark on the bottom line of companies in terms of their business operations in addition to eroding consumer wallets.

The truck and bus industry also bore the brunt of a widespread slowdown in economic activity. Industry-wide sales narrowed down by 41 percent year-on-year in 2023 to clock in at 3836 units. GHNI’s sales volume massively declined to clock in at 1600 units of trucks and buses, down 47 percent year-on-year, and 194 units of pick-up trucks, down 59 percent year-on-year in 2022. Gross profit plummeted by 22.21 percent year-on-year in 2023; however, GHNI was able to drive up its GP margin to 15.82 percent by passing on the onus of cost hikes to its consumers.

Distribution expenses declined by 4.46 percent year-on-year on account of lower payroll expenses. Administrative expenses increased by 5.48 percent year-on-year in 2023, mainly on account of higher repair & maintenance, utility charges besides traveling and conveyance charges. Operating profit declined by 25 percent year-on-year in 2023, however, check on operating expenses resulted in better OP margin of 8.2 percent. This was bound to lead to a finance cost that is 70.35 percent higher at 2023. It has resulted in a bottom line that is 75.37 percent thinner at 2023. The net profit stands at Rs.179.42 million for the year 2023 with EPS of Rs.4.21 and NP margin of 1.2 percent.

In the year 2024, the net sales have increased marginally by 0.85 percent for GHNI. Subdued demand was the fallout of economic and political instability reigning in the local market with inflation, discount rate, and exchange rate presenting their ugliest form. The overall industry volume declined by 31 percent in 2024 to clock in at 2641 units. The company sold 1333 units of trucks & buses and 154 units of D-MAX pick-ups down 16.69 percent and 20.62 percent respectively.

The cost of sales reduced by 3.63 percent in 2024 with efficient cost management. Coupled with strategic pricing decisions of the management, it resulted in 24.7 percent growth in absolute terms in the company’s gross profit with GP margin climbing up to 19.56 percent. Distribution costs increased by 16.55 percent during 2024 primarily because of higher commission, advertising costs, charges for delayed deliveries, and after-sales service charges during the year. Administrative costs increased by 3.26 percent during 2024 due to inflationary pressure. This was despite the company squeezing its workforce from 664 employees in 2023 to 542 employees in 2024. Reversal of the provision booked against ECL witnessed other expenses drop by 77.33 percent in 2024.

Lesser scrap sales made in the year also brought other income down by 34.39 percent in 2024. GHNI posted a 33.15 percent uptick in operating profit in 2024 as OP margin scaled up to 10.83 percent. Finance cost tapered off by 32.5 percent in 2024 with lesser borrowings. Coupled with the improved liquidity position of the company, it resulted in a gearing ratio of 0 percent in 2024 versus a gearing ratio of 26 percent recorded in the previous year. Net profit enhanced by 335.51 percent in 2024 to clock in at Rs.781.41 million with EPS of Rs.18.34 and NP margin of 5.33 percent.

Recent Performance (1QFY25): Ghandhara Industries Limited Holds 42million Shares

GHNI reported an impressive 140.26 percent year-over-year growth in its top line during the first quarter of FY25. Improvement in macroeconomic indicators especially decline in policy rate and general inflation contributed to an uptick in automobile sales during the quarter. Trucks & buses industry’s sales volume grew 72 percent year over year during 1QFY25.

The company sold 175 percent more units during 1QFY25 as compared to the sale volume achieved during the corresponding period last year. Cost of sales increased by 125.28 percent during 1QFY25. Gross profit thus increased by 210.59 percent during the quarter with GP margin clocking in at 22.70 percent versus GP margin of 17.56 percent recorded during 1QFY24.

Higher sales volume and capacity utilization reflected in 71.38 percent higher distribution expense and 22 percent higher administrative expense in 1QFY25. Higher provisioning for WWF, WPPF, and ECL had reflected 822 percent higher other expenses incurred during the period. On the other hand, this had been offset by 53.32 percent higher other income recognized during the period which seems to be the outcome of higher profit on saving accounts.

GHNI’s operating profit strengthened by 302.41 percent in 1QFY25 with OP margin clocking in at 16.93 percent versus OP margin of 10.11 percent recorded during 1QFY24. Finance cost slid by 74.29 percent during 1QFY25 due to discount rate cuts coupled with fewer outstanding borrowings. GHNI posted 936.73 percent higher net profit in 1QFY25 at Rs.638.6 million, with EPS of Rs.14.99 as against the EPS of Rs.1.45 recorded during the same quarter last year. NP margin grew from 2.45 percent in 1QFY24 to 10.55 percent in 1QFY25.

Future Outlook: Ghandhara Industries Limited Holds 42million Shares

With the ease of import restriction and the strengthening of Pak Rupee, the company may be able to reduce its cost. Furthermore, resumption of projects like Reqo Diq mining, Thar coal, and dam construction will add to the positive side of the demand for trucks. Axle load requirement may also benefit the company’s volumes.

Ghandhara Industries Limited Holds 42million Shares outstanding which are held by 8166 shareholders.

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