A lot has changed for rickshaw assembler Sazgar Engineering (PSX: SAZEW). For the most part, the changes have been good, and the company is certainly attracting market watchers’ attention. Back in 2022, Sazgar started dipping its toes into the small proverbial pool of opportunities that is the four-wheeler market by introducing two Chinese brands BAIC and Haval to domestic car buyers. By FY23, it was well and truly immersed, selling 1800 units of four-wheelers that took its revenue dramatically up. In FY24, this continues. In the second quarter of the fiscal year, earnings post-tax are the highest they have ever been.

At Rs756 million, Sazgar’s profits (Rs1.2 billion pre-tax) in fact hit the company’s peak despite higher revenue streams during the previous quarter (1QFY24) as well as the third quarter of FY23. Annually, revenues have doubled since Dec-22. Revenue also grew much higher than costs did leading to a growth in margins to 25 percent from 8 percent last year and 19 percent during the previous quarter. Volumes across the automobile industry are significantly down on account of a slowdown in demand (reduced spending due to high inflation, and higher cost of borrowing still), and supply restrictions imposed by the country’s precarious economic situation.

Though Sazgar’s sales are also down, they are not out, as the company’s Haval is quite the seller. In the first half thus far into FY24, the company has sold about 1300 units of the vehicle. The four-wheeler business alone has taken the company’s profitability up by 16x (comparing the quarter ending Dec-23 from the previous year same period), even though they constitute of only 20 percent towards the sales mix, considering rickshaws are volumetrically much higher.

Though the SUV segment—as small as it still is—is inundated with fresh options, it seems there is still space that can be edged in by motivated investors.