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Thursday March 28, 2024

KSE listed companies earn Rs142 billion in March

KARACHI: Companies listed on the Karachi Stock Exchange (KSE) 100-share Index posted a cumulative profitability of Rs142 billion for the quarter ended at March 31, a report by a leading brokerage house said on Wednesday. The corporate profitability grew 9.8 percent in the quarter over the corresponding three months last

By our correspondents
May 07, 2015
KARACHI: Companies listed on the Karachi Stock Exchange (KSE) 100-share Index posted a cumulative profitability of Rs142 billion for the quarter ended at March 31, a report by a leading brokerage house said on Wednesday.
The corporate profitability grew 9.8 percent in the quarter over the corresponding three months last year, said the report issued by Arif Habib Limited.
All the major sectors, excluding oil marketing companies (OMC), posted healthy results in the three months. Oil sector registered earnings below the expectation due to high inventory losses.
Analysts expected the market to remain positive during May because of the upcoming Morgan Stanley Capital International’s review of equity market and a growing expectation of a cut in the policy rate this month.
However, fear of new taxes in the new budget and an order of re-poll on the two constituencies by the election tribunal may whip up discomfort among investors, they said.
According to the report, banking sector was the star performer in the quarter under review as it posted better-than-expected results.
The sector’s profit rose 13 percent quarter on quarter (QoQ) and 48 percent year on year (YoY). Refineries and auto assemblers recorded massive upsurge in profits QoQ of 1,141 percent and 60 percent, respectively.
Analyst Shahbaz Ashraf at Arif Habib Limited attributed the robust growth in banking net profits to gains on sale of securities, including Pakistan Investment Bonds, and better investment margins (NIMs).
“Banking profitability may continue to surprise due to gain on sale of securities,” Ashraf said.
However, “NIMs in the upcoming quarters are expected to come under pressure due to delayed asset re-pricing after cut in policy rate (50bps in March) compared to immediate revision in cost of deposits.”
The report said margin expansion owing to yen depreciation and rise in other incomes boosted earnings in auto sector.
An unprecedented increase in gross refinery margins increased the refinery sector’s profitability.
It further said cement sector’s encouraging profits growth can be attributed to growth in dispatches along with the steady cement prices. Additionally, declining fuel and power cost on account of drop in global oil and coal prices, coupled with lower transportation costs, played a pivotal role in determining the impressive profitability of the sector, it added.
“Higher cement uptakes amid better PSDP (public sector development program) allocation/utilization, an expected boost (in consumption) from the private sector, lower finance cost and healthy margins paint even better picture for the sector,” Ashraf said.
Electricity sector’s profits dropped on the back of lower fuel oil prices and rupee appreciation against the US dollar.
At the current price level, Karachi stocks market is trading at a price earnings ratio of 8.4x and is providing a fat dividend yield of 6.5 percent, the report said.