⚡ Flash Summary

Al-Ghazi Tractors Limited (AGTL) reported a significant downturn in its financial performance for the nine-month period ended September 30, 2025. The company experienced a substantial decline in sales and revenue, primarily due to weakened farmer economics and deferred purchasing decisions amid anticipation of the Chief Minister’s Green Tractors Scheme. Resultantly, AGTL recorded a loss after tax of Rs. 270 million, a stark contrast to the profit of Rs. 2,369 million in the corresponding period last year. Despite these challenges, AGTL remains cautiously optimistic about the remainder of the year, expecting support from the Green Tractor Scheme to boost sales volumes.

📌 Key Takeaways

• 📉 Operating revenue declined by 59% to Rs. 9,761 million compared to Rs. 23,836 million last year.
• 🚜 Tractor sales significantly decreased as the company produced 5,005 units and sold 4,126 units, compared to 9,620 and 9,619 units, respectively, in the same period last year.
• 🌾 Approximately 2.5 million acres of crops were destroyed due to recent floods, representing about 7.7% of the country’s total cultivated land, impacting sales.
• ✅ AGTL successfully secured 3,728 units, representing 39% of the 9,500 tractors allocated under Phase I of the Chief Minister’s Green Tractors Scheme.
• 💰 Cost of sales decreased by 56% to Rs. 8,032 million from Rs. 18,135 million in the corresponding period last year.
• ⚠️ Gross profit decreased to Rs. 1,729 million, a decrease of Rs. 3,972 million compared to the corresponding period last year.
• 💸 Distribution and administrative expenses increased to Rs. 391 million and Rs. 1,390 million, respectively.
• ⛔️ Loss before tax is Rs. 405 million, compared to a profit before tax of Rs. 3,902 million in the corresponding period last year.
• 🔴 Loss after tax is Rs. 270 million, as compared to a profit after tax of Rs. 2,369 million in the same period last year.
• 📉 Loss per share recorded at Rs. 4.65 compared to profit per share of Rs. 40.87 for the same period last year.
• 🚧 The company is facing headwinds from the ongoing conflict along the western border, which poses a potential risk to export operations to Afghanistan.
• 🏢 Proposal to change Registered Office from Karachi to Lahore, pending approval at the upcoming Extraordinary General Meeting.
• 🌱 Anticipated support from the Green Tractor Scheme is expected to contribute positively to sales volumes in the last quarter.

🎯 Investment Thesis

Given the poor financial results, challenging market conditions, and increased risks, a SELL recommendation is warranted for AGTL. The company’s reliance on government schemes and vulnerability to economic downturns make it a risky investment. The significant decline in profitability and negative cash flow further support this recommendation. While the Green Tractor Scheme may provide some short-term relief, the long-term outlook remains uncertain. Further, there is a considerable potential risk in the continuity of export operations. A price target revision is needed to adequately reflect the decreased valuation.