Millat Tractors profit drops 17% in 1QFY26
Millat Tractors Limited (MTL) reported a 17% year-on-year decline in profit for the first quarter of FY2025–26, posting earnings of Rs514 million or Rs2.57 per share, well below market expectations. Quarterly profit also fell 61% compared to the preceding quarter, reflecting weaker sales and lower non-operating income.
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According to the company’s results released on Monday, net sales fell 6% year-on-year and 38% quarter-on-quarter due to reduced tractor demand. Unit sales dropped to 2,177 in 1QFY26 from 2,556 in the same period last year and 4,062 in 4QFY25. Industry analysts attributed the downturn to softer rural purchasing power and delayed government procurement activity following recent floods.
Gross margins narrowed by 188 basis points year-on-year to 27.21%, although improved sequentially from 25% in the prior quarter on cost rationalization and modest currency stability. Distribution expenses declined 4% in line with lower volumes, while administrative expenses increased 4% year-on-year to Rs406 million.
Other income dropped sharply by 69% year-on-year and 90% quarter-on-quarter to Rs32 million, as the previous quarter included a one-off Rs145 million gain from the sale of investment property. Finance costs, however, eased 25% year-on-year and 20% sequentially to Rs471 million despite higher borrowings, suggesting the new facilities were availed near the end of the quarter. The effective tax rate stood at 35%, slightly lower than last year’s 36%.
Market analysts maintained a cautious view on MTL, citing slower demand recovery and margin pressure amid elevated financing costs and weak rural liquidity. The company currently trades at FY26E/FY27F price-to-earnings multiples of 17.7x and 11.9x, respectively.
With agricultural reforms and mechanization incentives still pending, analysts expect Millat Tractors Limited to face a subdued earnings trajectory in the near term, though medium-term recovery could hinge on improved farm credit flows and stability in input prices,” Topline said.
