Sazgar Engineering Works Limited is expected to report a 38% year-on-year decline in profit after tax (PAT) to Rs2.7 billion for the first quarter of fiscal year 2026-27, as delayed hybrid vehicle deliveries, lower four-wheeler sales and rising costs put pressure on earnings.
The company’s earnings per share (EPS) are projected at Rs45 for the quarter ended September 2026, compared with Rs73.10 in the corresponding period last year, according to an analyst estimate.
Hybrid Vehicle Delays Weigh on Sales
Sazgar’s four-wheeler sales volumes declined 12% year-on-year during the quarter amid delays in hybrid vehicle deliveries. In contrast, three-wheeler volumes increased 45%, providing some support to the company’s overall business.
The delayed deliveries are expected to shift the sales mix towards internal combustion engine (ICE) vehicles. Meanwhile, Sazgar’s decision to absorb the higher sales tax on hybrid vehicles is likely to put additional pressure on revenue and profitability.
Overall revenue is projected to decline 12% year-on-year, reflecting weaker four-wheeler sales and the impact of delayed hybrid vehicle deliveries.
Profit Margins Face Significant Compression
Sazgar’s gross margin is expected to contract to 18.4% from 25.2% in the same quarter last year, representing a decline of 6.8 percentage points.
The company’s net profit margin is forecast to fall to 9.2% from 13.1%, while its operating margin is expected to decline to 14.4% from 21.7%.
The projected deterioration across all three margin indicators highlights the combined impact of changes in vehicle sales composition and higher costs. Despite the increase in three-wheeler volumes, weaker four-wheeler sales and delays in hybrid deliveries are expected to weigh on the company’s overall profitability.
Higher Finance Costs Add to Earnings Pressure
Finance costs are projected to increase 181% year-on-year, reflecting higher long-term borrowings of Rs5.3 billion.
The increase in financing expenses is expected to add further pressure to earnings at a time when the company is already facing lower revenue and contracting margins.
On a quarter-on-quarter basis, Sazgar’s PAT is forecast to fall sharply from Rs8.6 billion to Rs2.7 billion. EPS is likewise expected to decline from Rs144.40 to Rs45.
The company is expected to announce a dividend of Rs7 per share for the quarter, down from Rs15 per share in the corresponding period last year.
Sazgar Earnings Outlook Remains Under Pressure
Sazgar’s projected first-quarter results point to a challenging period for the automobile manufacturer. Delayed hybrid vehicle deliveries and lower four-wheeler volumes are expected to weaken sales, while higher finance costs and margin compression further reduce earnings.
Although three-wheeler volumes recorded strong growth, the increase may not be sufficient to offset the pressure from the four-wheeler segment.
Investors will monitor the pace of hybrid vehicle deliveries, changes in the sales mix and the company’s ability to manage financing and operating costs in the coming quarters. These factors will be important in determining whether Sazgar can recover its margins and earnings momentum during FY27.