The KSE-100 index has continued to be profitable so far this fiscal year, posting after-tax earnings of Rs. 877.6 billion in 9MFY23, an increase of 8.8% YoY from Rs. 806.8 billion in 9MFY22.
The benchmark index saw increase of 12.7% year over year (YoY) in the third quarter of FY23, collecting Rs. 353 billion.
Growth might have been higher if super tax hadn’t been a factor because PBT increased by 19.6% YoY in the third quarter of FY23 and by 15.7% YoY in the ninth quarter, according to Arif Habib Limited (AHL).
Commercial Banks Shows Positive Economic Growth in 9 Months of Fiscal Year
Due to a startling rise in interest rates, the KSE-100 index-heavy Commercial Banks sector saw an incredible 43 percent growth to Rs. 303 billion, driving the earnings surge in 9MFY23.
However, the bank recorded a significant super tax charge during the year, which reduced PAT growth and made the PBT growth much more impressive at 53.6 percent.
Following this was another powerhouse on KSE-100 inex, the Oil and Gas Exploration industry (+49.2 percent YoY to Rs. 312 billion), which benefited from rising oil prices as well as currency gains made during the fall of the Pakistani rupee.
Due to higher retention prices and the use of cheaper coal from Afghan and local markets throughout the year, the cement sector also reported an impressive increase in earnings of 27.4% to Rs. 27.6 billion, offsetting the effects of volumetric decline (-18% YoY), an increase in energy tariffs, and depreciation of the Pakistani rupee (PKR).
Because of a one-time gain that Lucky Core Industries Limited (LCI, previously ICI Pakistan Limited) realized on the sale of NutriCo Morinaga, the profitability of the Chemical sector increased by 43.1 percent YoY. Without this gain, the profitability of the sector would have decreased by 10 percent YoY.
The IT industry also reported a PAT of 3.5 billion rupees vs a LAT of 6.7 billion rupees for the same period last year.
The Fertilizer industry (-13.9 percent YoY to Rs. 63 billion) and exchange and inventory losses, as well as the impact of the super tax on the sector, were among the sectors that continued to lag in 9MFY23.
Due to significant inventory losses across the board and the lack of penalty income during the time period, the Oil and Gas Marketing sector’s earnings (Rs. 20 billion) fell by 73.5 percent year over year.
As KEL reported a loss in 9MFY23, the power sector reported a loss after taxes of Rs. 1.9 billion. Steel (Engineering) industry margins were reduced as a result of LC problems, high input costs (such as scrap and HRC), PKR depreciation, increased energy prices, as well as an increase in borrowing costs (rising interest rates), which reduced PAT by 56.6 percent YoY to Rs. 4.2 billion.
While Cnergyico PK Limited listed on KSE-100 index has seen enormous loss which caused the Refinery sector’s earnings to fall by 6.5 percent YoY to Rs. 7.5 billion.
Due to CKD import limitations and declining demand, the vehicle industry reported a loss after tax of Rs. 7.7 billion.
Q3 of Fiscal Year 2023
Profitability increased by 12.7 percent YoY to Rs. 353 billion in the third quarter of fiscal year 23 due to an increase in the profitability of industries with high index weights.
Commercial banks reported impressive profits (+53.0 percent YoY in 3QFY23), which was due to a sharp increase in net interest income.
Following this were the Oil and Gas Exploration industry (+60.2% YoY), which was driven by PKR devaluation and significant exchange gains, and the Cement sector (+35.7% YoY), which was driven by increased retention prices and the utilization of less expensive coal from nearby and local markets.
Additionally, the Steel sector on KSE-100 index reported higher margins and a 43.1 percent YoY increase in earnings to Rs. 2.8 billion.
Last but not least, the textile industry was able to report a 31.5 percent YoY increase in profitability, mostly as a result of Interloop Limited’s exceptional performance.
While other industries, such as Oil and Gas Marketing (-51.8 percent YoY), Automobile (loss of Rs. 7.1 billion vs. profit during SPLY), Pharmaceutical (-81.1 percent YoY), and Refinery (-41.7 percent YoY), succumbed to high-cost pressures, volumetric decline, and exchange losses that reduced margins.
KSE-100 index earnings increased by 30.3 percent quarter over quarter, with banks leading the way (+21.8 percent QoQ), mostly as a result of higher interest rates.
Due to significant exchange gains despite currency depreciation, oil and gas exploration PAT increased by 60.5 percent QoQ. Following this, the Chemical sector experienced growth as a result of a one-time profit reported by LCI.
The profitability of the textile and steel sectors, which had been in the red during the previous quarter, increased by 597 percent and 34 times quarter over quarter.
Contrarily, the Fertiliser sector reported a 42 percent QoQ fall in earnings due to losses incurred by FFBL. A LAT of Rs. 5.2 billion was also reported by the technology sector despite PTC losses.
Additionally, the Power sector reported LAT of Rs. 0.4 billion despite KEL losses, and even without those losses, profitability would have decreased by 17% as a result of the insurance claim filed by HUBC in the most recent quarter.
The KSE-100 index decreased by -3.7 percent (-1,540 points) in 9MFY23. Pharmaceuticals, which lost 449 points, continued to have the worst performance, followed by Automobile, which lost 388 points, Food, which lost 318 points, Banks, which lost 286 points, Chemicals, which lost 268 points, and Cement, which lost 201 points.
Key gainers, however, included Technology & Communication (801 points), Power (+498 points), Energy & Petroleum (+325 points), and Fertiliser (+316 points), according to KSE-100 index points.
The KSE-100 index decreased by -1.0 percent (-420 points) sequentially during 3QFY23. The worst-performing sector, Technology & Communication, continued to decline by 163 points, followed by OGMCs (-163 points), Food (-158 points), and Pharmaceuticals (-129 points).
However, the Fertilizer sector increased the index by 327 points, followed by the Banks (+256), Power (+225), and E&P (+168) sectors, according to KSE-100 index points.
To read our blog on “KSE-100 climbs 692 points, with energy stocks driving the advance,” click here.