Amreli Steel Limited (ASTL) has recorded a net profit of Rs1.34billion (EPS: Rs4.61) during FY21, a turnaround from the same period last year when it incurred a net loss of Rs1.24bn (LPS: Rs4.18).
This swing in profitability is due to impressive gross margins.
During the period under review, the company witnessed robust growth in topline as it went up by 48%YoY to Rs39bn due to a massive jump in offtakes. Resultantly, the gross margins expanded from 7% to 12% amid a significant increase in local rebar prices for the fourth quarter of FY21, a research note by Darson Securities noted.
On the cost front, the distribution and administrative expenses surged by 39% and 10% YoY to stand at Rs945mn and Rs554mn, respectively.
On the other hand, the finance cost of the company declined by 28% YoY to Rs1.65bn on the back of a decline in borrowing rate and loans repayment that helped in strengthening the bottom line. However, the company booked a tax expense of Rs15.7mn during FY21 against a tax reversal of Rs700mn in FY20.