-Mughal Iron & Steel Ltd (MUGHAL) announced its 3QFY20 results earlier today, posting Net Profit after Tax (NPAT) of PkR33mn (EPS of PkR0.13/sh), down 91%Y/Y and 67%Q/Q. The result was below market consensus of PkR0.79/sh. We expect the stock to remain under pressure on the back of subdued earnings driven by higher finance cost. For 9MFY20, the company reported profit after tax of PKR400mn (EPS of PkR1.59/share), down 63%Y/Y.

-Revenues of the company increased 5%Y/Y while declined 2% Q/Q to PkR7.2bn. GP margins improved 1.8ppts to 8.8% on a sequential basis with the increase attributable to lower scrap prices during the period. On a yearly basis, however, margins declined by 3.2ppts Y/Y.

-Financial charge surged 1.4x Y/Y & 47% Q/Q to PkR505mn. We suspect the surge in finance cost was likely accountable to exchange losses as PKR depreciated 7.5% against USD in the last 15days of the quarter. We await detailed accounts and management’s guidance on this number.

-MUGHAL reported before tax loss of PkR14mn compared to PkR422mn in 3QFY19. The bottom-line turned green, however, on account of a tax reversal of PkR47mn during the period.