Nishat Mills Ltd is expected to announce after tax profit of Rs 280 million to Rs 310 million for first half year ended on March 31, 2004, because of higher exports and cut in financing costs.
Nishat Mills, the largest listed textile company, will be holding its board meeting on May 25, 2004, in order to announce results for 1H2004 (October 2003 - March 2004). Investors have begun to speculate on the company's expected performance during 1H2004.
"We expect Nishat Mills to announce profit after tax of Rs280-310 million, or 2.3 rupees to 2.5 rupees a share, for 1H2004.
This would represent a growth of 25-38 percent over Rs 224 million, or 1.83 rupees a share, earned during 1H2003. The company has already earned Rs 150 million or 1.23 rupees a share during 1Q2004 (October-December 2003)," a report of Investcapital Securities said.
The 1Q2004 profits had surged due mainly to 44 percent decline in financial charges, and also due to nearly doubling up of other income, thanks to dividend from DG Khan.
For 2Q2004 (January-March 2004), the company is likely to face lower margins as compared to 2Q2003 due to higher cotton prices. This is likely to dampen the benefit from an expected 35 percent decline in financial charges during the quarter.
The brokerage house does not expect the company to pay out any interim dividend as Nishat usually pays out dividends with full-year results.
The upcoming FY05 Budget may be a positive one for the local textile sector, which contributes around 65 percent to the country's total exports.
The Industries Minister has already hinted at duty reduction on textile machinery.
"We believe that this would bode well for the textile sector and help it in growing capacity in order to compete in the post-January 2005 non-quota regime", the report said. "Aptma's demand for removal of GST on ginned cotton, we believe, may not materialise."
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