Millat Tractors Limited (MTL) announced its half-yearly results today, wherein its profit after-tax (PAT) declined by 20 percent year-on-year (YoY) to Rs. 2.92 billion.
For 2QFY26, MTL posted an unconsolidated PAT of Rs. 2.4 billion (EPS: Rs. 12.06), down 21 percent YoY but up 4.7 times quarter-on-quarter (QoQ).
Topline Securities said the result exceeded expectations due to higher-than-expected gross margins.
Alongside the results, the company announced a cash dividend of Rs. 20 per share for 2QFY26 (1HFY26 payout: 137 percent), which was higher than market expectations.
Gross margins surged to 35 percent in 2QFY26, compared to 25 percent in 2QFY25 and 27 percent in 1QFY26. This brought 1HFY26 gross margins to 33 percent, up from 27 percent in 1HFY25.
Net sales increased by 7 percent YoY and 2.8 times QoQ to Rs. 20.9 billion. The strong QoQ growth was driven by higher tractor sales of 6,335 units, up 2.9 times QoQ.
This takes 1HFY26 tractor sales to 8,512 units, down 16 percent YoY. Notably, sales were largely supported by the Punjab Government’s Green Tractor Scheme; in its absence, volumes would have been lower.
Distribution expenses rose 29 percent YoY and 2.1 times QoQ, primarily due to the increase in tractor sales.
Finance costs declined 27 percent YoY and 15 percent QoQ in 2QFY26, mainly due to a reduction in short-term borrowings to Rs. 9.1 billion in December 2025, compared with Rs. 17.3 billion in September 2025 and Rs. 14.0 billion in June 2025.
The company recorded a tax expense of Rs. 2.95 billion in 2QFY26, resulting in an effective tax rate (ETR) of 55 percent, significantly higher than the expected 39 percent. This compares with a tax reversal of Rs 67 million in 2QFY25. Consequently, the 1HFY26 ETR stood at 53 percent, versus 7 percent in 1HFY25.
MTL is currently trading at an FY26E/FY27F price-to-earnings ratio of 18.7 times and 12.9 times, respectively.
