International Steel Limited (PSX: ISL) announced its result for the second quarter of fiscal year 2017. The earnings per share of the company clocked in at 1.37 rupees up a remarkable 372 percent compared to the same period last year. There was no dividend pay-out with the result.
The revenues of the company are up 57 percent, while gross margins increased by an astonishing 19 percent. The main driver for this growth is the surge in domestic demand, which was further facilitated by increase in international iron ore prices and the import duties imposed by the government. International Steels in the last quarter alone has increased per ton prices of its Cold Rolled (CRC) products by 6,500 rupees. Yesterday the company further increased its prices by 2,000 rupees per ton.
International Steels stock was one of the best performing stocks for the year 2016 with a return of 300 percent. Since start of 2017, the stock has maintained its upward trajectory. After the announcement of the second quarter result, the stock tanked down and hit its lower circuit breaker. Investors were expecting an even better result. The tax rate of 58 percent dragged down the earnings which was not expected by the analysts.
The finance cost of the company also dropped as interest rates reached record low levels. The distribution and selling cost was higher than last year as the quantity supplied increased from last year which in turn increased logistics cost.
Looking forward, the company is poised to be in the limelight. Recently NTC imposed anti-dumping duty on CRC products imported from China and Ukraine for five years. The market is also expecting same type of verdict on High Density Galvanised Coils (HDGC) as well, which would further strengthen the companys position in the local market. With five years protection from imported steel, the market is also expecting International Steels to announce capacity expansion.
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