Sazgar Engineering Works posts a quarterly profit of Rs4 billion as higher revenue from the Tank 500 launch is offset by lower margins and rising finance costs.

Sazgar Engineering Works Limited (SAZEW) has reported a decline in profit for the first quarter of the financial year 2026-27 (1QFY27), with net profit falling to Rs4 billion from Rs4.4 billion in the same period last year.

According to the company’s financial results, earnings per share (EPS) stood at Rs66.8, compared with Rs73.1 in the corresponding quarter of the previous year. However, the results exceeded analysts’ expectations because of stronger-than-anticipated revenue and gross margins.

Revenue increased by approximately 23 per cent year-on-year to Rs41.7 billion, primarily driven by the addition of the Tank 500 to the company’s product portfolio. However, revenue declined around 45 per cent quarter-on-quarter due to lower sales volumes.

Gross margins fell by 480 basis points year-on-year and 190 basis points quarter-on-quarter to approximately 20.4 per cent. Analysts attributed the decline to the expiry of tax incentives under the 2016-21 and 2021-26 automotive policies.

Selling and distribution expenses rose by 72 per cent year-on-year, potentially reflecting higher advertising costs associated with the Tank 500 launch and upcoming products.

Finance costs surged by 321 per cent year-on-year and 118 per cent quarter-on-quarter, mainly due to long-term borrowings secured to finance capital expenditure. Long-term borrowings increased to Rs7.5 billion in 1QFY27 from Rs5.2 billion in the preceding quarter.

Alongside its results, Sazgar announced a cash dividend of Rs5 per share for the quarter.

The results highlight the impact of rising financing expenses and reduced margins despite stronger annual revenue growth.