Sazgar Q1 Profit Declines After Higher Taxes

Sazgar Engineering Works Limited (PSX: SAZEW) documented a profit of Rs.

Key points

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• Sazgar's effective tax rate stood at 37 percent in 1QFY27, compared with 39 percent in both 1QFY26 and 4QFY26.
• Four wheeler sales stood at 3, 137 units during the quarter, down 12 percent year over year and 50 percent quarter over quarter.
• Sazgar's gross profit margin settled at 20 percent during the quarter, compared with 25 percent in 1QFY26.

Sazgar Engineering Works Limited (PSX: SAZEW) documented a profit of Rs. As its earnings per share (EPS) fell to Rs, 4.04 billion in the first quarter of fiscal year 2027, down 9 percent year over year and 54 percent quarter over quarter. 66.77.

For context, the company's earnings nevertheless exceeded industry expectations, backed by higher-than-expected gross margins, according to Topline Securities.

Alongside its financial results, Sazgar confirmed an interim cash dividend of Rs. 5 per share, translating into a payout ratio of 7 percent, compared with 21 percent in the same quarter last year. The dividend was lower than market expectations, according to the brokerage. Sazgar's Revenue Rises 23 Percent Annually.

In practice, the company's net sales rose 23 percent year over year to Rs. 41.71 billion in 1QFY27, driven by the addition of the Tank 500 to its lineup. Nevertheless, revenue declined 45 percent quarter over quarter due to lower sales volumes.

Four wheeler sales stood at 3, 137 units during the quarter, down 12 percent year over year and 50 percent quarter over quarter. Meanwhile, three wheeler sales rose 45 percent year over year and 4 percent quarter over quarter to 7, 735 units, compared with 5, 346 units in 1QFY26 and 7, 408 units in 4QFY26. Gross Margins Decline Despite Better Than Projected Results.

Sazgar's gross profit margin settled at 20 percent during the quarter, compared with 25 percent in 1QFY26. Topline Research attributed the decline to higher general sales tax on hybrid electric vehicles and plug in hybrid electric vehicles, a portion of which the firm is absorbing.

Nevertheless, margins remained above expectations despite the expiry of concessionary tariffs on raw materials and parts. According to Topline Research, the company's inventory of approximately Rs. 42 billion in June 2026 had probable covered most of the raw material costs for the quarter.

Distribution expenses rose 72 percent year over year to Rs. 1.7 billion, largely due to higher net sales. While other expenses fell 10 percent year over year and 54 percent quarter over quarter, administrative expenses rose 6 percent year over year but declined 6 percent quarter over quarter.

Other income rose 22 percent year over year but declined 6 percent quarter over quarter to Rs. 629 million. Meanwhile, finance costs rose 4.2 times year over year, driven by higher long term borrowings.

Sazgar's effective tax rate stood at 37 percent in 1QFY27, compared with 39 percent in both 1QFY26 and 4QFY26. Topline Research remarked the reduction was in line with a 200 basis point cut in the super tax under the FY27 budget. Stay Connected with ProPakistani.

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