MTL earnings forecasts raised up to 45% on strong margins

June 16, 2026 (MLN): Earnings estimates for Millat Tractors Limited (MTL) have been revised upward by an average of approximately 45% for FY26E–FY28F to Rs49.1, Rs68.5, and Rs77.9 per share, from earlier projections of Rs29.1, Rs35.2, and Rs42.6 per share respectively, driven by higher-than-expected gross profit margins, according to Topline Securities.

The revision has prompted an upgrade in MTL's investment stance from SELL to BUY, with a revised June 2027 target price of Rs639 per share implying an upside of 26.2%, inclusive of a 12% dividend yield.

At the target price, FY27E/28F price-to-earnings multiples work out to 9.3x and 8.2x, against the company's five-year historic forward PE of 12.7x.

On margins, gross profit assumptions have been revised upward to 35%/34%/34% for FY26E/FY27F/FY28F from earlier estimates of 26%/24%/24%.

The revision shows the average gross margins of 37% recorded over the last two quarters, compared to the FY23–25 average of 24%.

Margin improvement has been attributed to cost controls, tractor price increases, and the merger of the tractor business with Millat Equipment Limited a backward integration initiative approved by the Lahore High Court in February 2025.

On volumes, tractor sales are estimated at approximately 19,000 units in FY26, rising 30% to 25,000 units in FY27 and a further 10% to 27,500 units in FY28, supported by improving farm economics driven by rising crop prices.

MTL's peak sales stood at 43,157 units in FY18; projected FY28 volumes remain 36% below that historical high.

On a new business front, shareholders approved a 1:2 stock split and financing support for an electric bike project at an Extraordinary General Meeting held on June 5, 2026.

MTL's subsidiary, Millat Industrial Products Limited (MIPL), has entered into an MoU with China-based Xiadau Electric Co., Ltd. for the assembly, manufacturing, and marketing of electric bikes in Pakistan, in alignment with the Government of Pakistan's National Electric Vehicle Policy 2025–30.

The assembling plant has been dispatched from China and is expected to be installed within two to three months, with the first CKD rollout anticipated in September–October 2026.

Initial annual capacity on a single-shift basis stands at 50,000 units, with scope for further scale-up.

Management views the segment as a high-growth opportunity, citing global adoption of swappable battery-based scooters and urban mobility solutions. E-bike volumes have not been incorporated into the current earnings forecasts.

Copyright Mettis Link News