Business Recorder
Rickshaw maker turned SUV powerhouse Sazgar Engineering (PSX: SAZEW) has no plans of stopping. The company’s third quarter of FY26 ending March 2026 is its strongest on record by almost every measure, coming in ahead of industry expectations on the back of better than anticipated gross margins. Revenues surged 29 percent year-on-year driven overwhelmingly by four-wheeler volumes, which posted a remarkable 41 percent jump to 5,420 units, compared to 3,836 units in 3QFY25 and 3,653 units in 2QFY26. That kind of acceleration demonstrates the stickiness of Haval’s demand. Three-wheeler volumes also rose 10 percent year on year to9,024 units. Though much smaller in comparison, this segment continues to play steady support to the star performer. Margins have remained strong and above expectations at roughly 27 percent, declining from the peak of 33 percent in 3QFY25.This reduction was expected as the company transitions out of concessionary duties and there is a shift in the product mix toward higher petrol variants. The company has a surprisingly strong command over its overheads, maintaining them at 4 percent of revenues despite selling more vehicles. Administrative expenses are almost negligible. The company’s cost discipline is a defining feature of its business model since it entered the four-wheeler market. Buttressing the bottom-line is other income that rose 2.6x year on year, driven by higher treasury income on the company’s growing cash balance. Meanwhile, financial charges were minimal and inconsequential to the scale of the operations. The earnings per share of Rs106.51 are a new quarterly record that eclipses the prior high in the same quarter last year. To celebrate, the company announced an interim cash dividend of Rs20 per share, implying a payout ratio of 19 percent. In total, the nine-month dividend is Rs50 per share with a cumulative payout ratio of 20 percent. This signals to the shareholders that the company is generating more cash than it needs to reinvest right now. What sets Sazgar apart is its consistency. The company has not posted a single weak result across the last eight quarters. Sazgar’s per-unit profitability remains unmatched among listed assemblers (Read: “Keeping up with Sazgar”) The road ahead is not entirely without bumps. Selling expenses are rising faster than revenue. The company will need volumetric growth to compensate for a different cost scenario. As petrol price volatility grows, households will eventually readjust their buying behaviors around new realities. This means shifting toward EVs and hybrids. It is a good thing that Sazgar is prepared for when that shift happens.
Go to News Site