Sazgar Engineering Works Limited (PSX: SAZEW), which assembles Haval and BAIC vehicles as well as auto rickshaws in Pakistan, announced its results for the three months to 30 September 2026 after a board meeting in Lahore on 26 October 2026; the filing reached the Pakistan Stock Exchange on 27 October. This is the first quarter of its 2027 financial year, which runs to June 2027.
The headline: a profit after tax of Rs 4.04 bn, or Rs 66.77 a share, down 8.6% from Rs 4.42 bn (Rs 73.07) a year earlier, even though sales rose 23%. The board declared an interim cash dividend of Rs 5 a share (50%), against Rs 15 at the same stage last year. No bonus or right shares were announced.
The quarter in numbers
| Rs M | Jul to Sep 2026 | Jul to Sep 2025 | Change |
|---|---|---|---|
| Sales, net | 41,711 | 33,825 | +23.3% |
| Cost of sales | (33,197) | (25,303) | +31.2% |
| Gross profit | 8,514 | 8,521 | flat |
| Gross margin | 20.4% | 25.2% | down 4.8 points |
| Distribution and marketing costs | (1,662) | (964) | +72.4% |
| Administrative expenses | (218) | (206) | +5.7% |
| Other operating expenses | (487) | (542) | −10.2% |
| Operating profit | 6,148 | 6,809 | −9.7% |
| Other income | 629 | 514 | +22.4% |
| Finance cost | (334) | (79) | 4.2 times |
| Profit before tax | 6,443 | 7,243 | −11.1% |
| Tax (effective rate 37.4% against 39.0%) | (2,407) | (2,826) | −14.8% |
| Profit after tax | 4,036 | 4,417 | −8.6% |
| Earnings per share, Rs | 66.77 | 73.07 | −8.6% |
| Interim dividend per share, Rs | 5.00 | 15.00 | −67% |
What drove the result
More revenue, no more gross profit. Sales rose by Rs 7.9 bn but cost of sales rose by Rs 7.9 bn too, so gross profit stayed at about Rs 8.5 bn and the gross margin fell from about 25% to about 20%. Press coverage of the result points to the higher general sales tax on hybrid and plug-in hybrid vehicles, which are a large part of Sazgar’s Haval line-up. Even so, Topline Securities said margins came in better than the market had expected.
A different sales mix. According to the same coverage, Sazgar sold 3,137 cars and SUVs, 12% fewer than a year earlier, but 7,735 three-wheelers, 45% more. Revenue still rose because the car range now includes the higher-priced Tank 500.
Selling costs jumped 72%. Distribution and marketing costs rose from Rs 964 M to Rs 1,662 M, about 4% of sales against under 3% a year earlier. The filing does not break this down; a new model launch and a tougher market for cars would both push it up. This, more than the margin, is why operating profit fell almost 10% while gross profit held steady.
Borrowing costs rose four times. Finance cost climbed from Rs 79 M to Rs 334 M. Sazgar’s Islamic financing (diminishing musharakah) rose to about Rs 7.8 bn including the current portion, from about Rs 5.3 bn at the end of June. The money is going into the plant: property, plant and equipment grew by almost Rs 3 bn in the quarter, to Rs 26.0 bn.
Well below the record quarter. Compared with April to June 2026, when Sazgar earned a record Rs 8.73 bn, profit fell 54% and sales fell 45%. The June quarter was exceptional rather than typical (a year earlier, April to June 2025 was Sazgar’s weakest quarter of that year), but the drop still shows how far quarterly profit has come down from its peak.
The balance sheet
- Plenty of cash. Cash and bank balances rose to Rs 18.0 bn from Rs 14.0 bn in June, more than twice the Rs 7.8 bn of financing. On a net basis Sazgar still has about Rs 10 bn of cash.
- Large stock and supplier credit. Inventory is Rs 41.8 bn, about the size of a full quarter’s sales, and trade and other payables are Rs 28.2 bn.
- Equity rose to Rs 45.8 bn, about Rs 758 a share.
The dividend
The Rs 5 interim dividend is a third of last year’s first interim of Rs 15 and below what the market expected. With profit only 9% lower and Rs 18 bn of cash on hand, the cut is a choice rather than a necessity, most likely to keep cash for the investment programme. For the 2026 financial year Sazgar paid Rs 70 a share in total (Rs 15, Rs 15, Rs 20 and a Rs 20 final), up from Rs 52 the year before. Shareholders on the register on 8 November 2026 receive it, and the share register is closed from 9 to 11 November. Because 8 November is a Sunday, buyers need to buy by about 5 November.
Also in the filing
The board approved higher monthly pay, net of tax, for the top executives from 1 July 2026: Rs 7.0 M for the Chief Executive, Rs 4.0 M for the executive director running three-wheelers and auto parts, and Rs 2.5 M for the executive director running the car division.
Valuation snapshot
At the 28 October close of Rs 1,453.26, up 4.6% on the day after the result:
| Measure | Value |
|---|---|
| Earnings per share, last 12 months (October 2025 to September 2026) | about Rs 384 |
| Price to earnings | about 3.8 times |
| Price to book | about 1.9 times |
| Dividends declared, last 12 months | Rs 60 a share, a yield of about 4.1% |
| Market value (60.4 million shares) | about Rs 88 bn |
| Share price, last 52 weeks | low Rs 1,364, high Rs 2,487 |
The stock is about 42% below its 52-week high and close to its low. At under 4 times last year’s earnings it is priced for a sharp fall in profit, which this quarter has started to show, though not on that scale. The last 12 months include the record June quarter, so if the coming quarters look more like this one, forward earnings will be lower than Rs 384 a share and the price to earnings ratio correspondingly higher.
What to watch next
- Car volumes. Four-wheeler sales fell 12%. Monthly industry figures will show whether new models such as the Tank 500 can turn that around.
- Tax on hybrids. Margins depend heavily on the sales tax treatment of hybrid and plug-in hybrid vehicles. Any further change would move profit directly.
- Selling costs. Whether the 72% jump in distribution and marketing was a one-off launch cost or a new normal.
- Investment and dividends. With financing up to about Rs 7.8 bn and the dividend cut, watch whether the investment programme keeps the payout low through the year.
The bottom line
Sazgar grew its sales but not its profit. A lower gross margin, much higher selling costs and four times the finance cost took operating profit down 10% and net profit down 9%. Fewer cars were sold, partly offset by more expensive models and many more rickshaws. The cut to a Rs 5 interim dividend, while cash keeps rising, shows management putting investment first. The shares already trade at less than 4 times last year’s earnings, so the question for investors is whether this quarter is a new, lower base or a pause after a record year.
You can follow SAZEW’s price, Pulse Score, dividend history, results calendar and off-market trades in the Market Pulse Hub dashboard under PSX.
Bilal, Market Pulse Hub
Source: Sazgar Engineering Works Limited, unaudited condensed interim financial statements for the quarter ended 30 September 2026 and the board’s announcement of 26 October 2026, filed with the Pakistan Stock Exchange. Unit sales, the sales tax explanation and the analyst comment are from press coverage of the result (TechJuice). Earlier quarters and dividends from company filings and PSX payout announcements. Prices from the PSX data portal. Per-share, twelve-month and valuation figures are our calculations. This article is for education and information only and is not investment advice.