KSE-100 profitability increases 9.4% in 2022
Business
Barring impact of super tax, growth could be higher as PBT jumped by 29.8%, AHL report
KARACHI (Web Desk) - Notwithstanding a downturn in the local economy, risks to the external sector, imported inflation and pressure on the rupee, the KSE-100 index's profitability increased by 9.4% in 2022 on an annual basis, according to a research released on Wednesday by brokerage firm Arif Habib Ltd. (AHL).
The research firm stated in a study titled "KSE-100 Index Profitability" that growth might have been even greater "barring the impact of super tax" because to the profit before tax’s (PBT) increase of 29.8% in CY22.
Due to a sharp increase in interest rates, the index-heavy commercial banks sector saw a 15.5% growth in earnings to Rs302 billion. However, the PBT growth was much more impressive at 42.6% as the bank had a significant super tax charge during the year, which reduced the growth in profit after tax (PAT).
The oil and gas exploration industry, which increased by 33.3% annually to Rs300 billion due to higher oil prices following the Russia-Ukraine war and currency gains made despite rupee depreciation, came in second, according to the study.
In addition, the cement industry stood out with a 14.5% increase in profits to Rs61 billion due to higher retention prices and the use of cheaper coal from the Afghan and local markets throughout the year, which helped to offset the effects of volumetric decline (-16% year-over-year), an increase in energy prices, and rupee depreciation.
Gains in inventories, per the study, contributed to the oil and gas marketing sector's 11.4% increase in earnings (to Rs68 billion).
Higher PTA margins and currency depreciation contributed to the chemical industry's profitability, which increased by 2.2% on an annual basis to Rs38 billion.
Due to inventory gains and greater GRMs, the refinery segment's profitability increased by a factor of four to Rs25 billion.
The sectors that lagged behind in CY22, on the other hand, were fertilizer (-16.7% year over year to Rs64 billion) as DAP sales were negatively impacted (-36% year over year) by high pricing and the implementation of the super tax, which wiped out the bottom line.
Also, it stated that the profitability of the IT industry fell by 10.8% on a year-over-year basis to Rs11 billion, particularly in light of the loss reported by PTC.
According to the study, K-loss Electric's in CY22 caused the power sector's earnings to decline by 42.8% year over year to Rs24 billion.
The study said, "Last but not least, the car and steel (engineering) industries came under pressure as margins were sliced due to LC difficulties and high input (scrap and HRC) prices, rupee devaluation and increased energy tariff, as well as increase in borrowing expenses (interest rate hikes).
"The KSE-100 index decreased by -9.4% in CY22" (-4,176 points). AHL said that the banking sector continued to have the poorest performance, losing 1,844 points, followed by cement (-1,391), pharmaceuticals (-494), engineering (-301), and food (-295). Fertilizer (619 points), electricity (312 points), technology and communication (287 points), and chemical (103 points) were big gainers, on the other side.
KSE-100 index firms served as the basis for the report's study. As the remaining 17 firms haven't yet revealed their results, it includes the outcomes of 83 companies.
The businesses that were "included in our research" accounted for about 86.6% of the benchmark bourse's market value, it claimed.
