Analyst Briefing: ITTEFAQ plans to enter in Copper segment

June 21, 2021 (MLN): Ittefaq Iron Industries Limited (ITTEFAQ), a leading producer of long steel and ancillary products, conducted a corporate briefing session on Friday, to discuss 9MFY21 results. The major angle of the session was to discuss numbers and shed light on the road ahead for the company.

To recall, ITTEFAQ posted a profit of Rs79mn/Rs192mn (EPS: Rs0.55/Rs1.33) in 3QFY21/9MFY21 against the loss of Rs49nmn/Rs202mn (LPS: Rs0.34/Rs1.40). As per the management, the increase in profit was mainly due to favorable policies introduced during the year which helped the company boost its numbers.

According to the key takeaways of the briefing covered by JS Global, the company’s major manufacturing items include iron bars, girders, and ancillary products. Further, the company looks forwards to enhance its product line by introducing ‘Channel and Angel’, ‘T-iron’ and ‘I and Beam’.

In terms of the customer development portfolio, the company draws divisions in categories i.e., Retail, Corporate sector and the Government. 

With regards to the revenue generation of the company, 55% of the revenue generated by the company comes from Grade 40 re-bars, 35% from grade 60 re-bars, while the remaining 10% comes from girders which are sold on a cash basis.

To reduce procurement charges, the company has taken a step in forming ITTEFAQ Trading for the procurement of raw materials from the UK, which is one of the largest scrap importers. The impact of this will be visible in 4QFY21, the management said.

In addition, the company is also planning to enter the copper segment, for which management is under discussion with the US. A key step for the plant structure is underway, making the plant modernized to enhance the capacity utilization and last but not least ITTEFAQ is also looking forward to implementing B2B and B2C model in Pakistan to capture the market share.

With the key projects which are currently underway such as Mohammad Dam, Dassu Dam, Sukhi Kinari Dam, Lime Light and other massive towers construction in Punjab and KPK, the FY22 seems to provide a robust growth in the steel sector where these important projects could lead onto future revenue growth. Apart from that, the fact that there could be a rise in Re-bars and girders prices by 10-11% due to increasing demand, the company could generate a substantial profit in the coming FY22.

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