SAZEW Profit Rises 5% in Q1FY26 on Strong Four-Wheeler Sales

Sazgar Engineering Works Limited (SAZEW) reported a 5% year-on-year increase in quarterly profit, driven by robust four-wheeler sales and higher-than-expected gross margins, signaling continued strength in Pakistan’s auto demand despite new levies on electric vehicles.

SAZEW announced its 1QFY26 result, wherein the company recorded profit of Rs4.4bn (EPS of Rs73.06), up 5% YoY. The result came higher than industry expectations due to higher-than-expected gross margins. Haval SUV sales To Push Sazgar Profit in 1QFY26

The company reported gross margins of 25.2% in 1QFY26 (vs. our expectation of 22.1%),  as compared to 28.94% in 1QFY25 and 25.1% in 4QFY25. The margins on QoQ remained largely unchanged despite the absorption of EV adaption levy of 2% of car price effective Jul 2025.

Alongside the results, the company announced a dividend of Rs15/share in 1QFY26 (Payout ratio: 20.5%).

Net sales of the company surged by 28% YoY and 24% QoQ to Rs33.8bn in 1QFY26. This trend was largely driven by four-wheeler volumes, which increased 37% YoY and 26% QoQ, with sales clocking in at 3,557 units compared to 2,605 units in 1QFY25 and 2,817 units in 4QFY25. To highlight, this quarter sales also includes PHEV variants as HAVAL H6 PHEV was launched in Aug-25.

However, three-wheeler sales fell by 2% YoY and 15% QoQ to 5,346 units in 1QFY26 vs. 5,435 units in 1QFY25 and 6,258 units in 4QFY25.

Distribution expenses rose YoY by 30% YoY while fell 9% QoQ while Admin expenses rose 68% and 9% QoQ. Other expenses rose 11% YoY but fell 29% QoQ.

Other income rose by 27% YoY and 72% QoQ to Rs514mn in 1QFY26 due to increase in cash and cash equivalents.

Effective tax rate in 1QFY26 stood at 39% compared to 36% in 1QFY25 and 39% in 4QFY25.

The company recorded cash and bank balances of Rs31.3bn, reaching an all-time high — indicating strong product demand as this also includes advance from customers.

We maintain our BUY call for SAZEW as company is currently trading at an FY26/FY27F PE of 6.5/5.3x.,” Topline analysts said.