The past two years have seen the tractor industry make an impressive comeback with tractor sales growing by a wide margin - increasing from 21,111 units in the previous year to 33,892 in FY17. The growth in tractor sales could be attributable to the recovery in the ailing agricultural sector. Another pertinent reason for the boost is the reduction in GST from 10 to 5 percent, which helped the industry push up sales.

Millat Tractors Limited (PSX: MTL) posted its FY17 result yesterday, which was nothing short of spectacular with the firm’s revenues surging by an impressive 76 percent on a year-on-year basis. The company’s gross profit almost doubled due to an improved sales mix, which tilted towards higher margin models.

The company’s operating expenses were kept in check although other operating expenses saw an increase of 130 percent. Consequently, MTL posted a phenomenal increase in its operating profit for FY17, which registered an increase of almost 133 percent as compared to FY16.

MTL also saw a significant rise in its other income, which could be attributable to gain, booked on sale of short term investments and interest income on its commercial bank deposits, according to a research note by Arif Habib Limited (AHL). The company was also able to take advantage of the low interest rate environment to bring down its financing cost even further.

Coming to the bottom-line, the firm recorded an impressive increase of 142 percent as compared to the corresponding period in the previous year. MTL’s consolidated EPS more than doubled from Rs46 in FY16 to Rs111.14 in FY17. It also announced a final cash dividend of Rs60 per share bringing the full year pay-out to Rs95 per share as compared to Rs50 in FY16.