Baluchistan Wheel Limited

Baluchistan Wheels Limited (PSX: BWHL) was incorporated in Pakistan as a public limited company in 1980. The principal activity of the company is the manufacturing and sale of automotive wheel rims for cars, buses, trucks, tractors and mini commercial vehicles. Pattern of Shareholding As of June 30, 2025, BWHL has a total of 13. 334 million shares outstanding which are held by 1778 shareholders. Directors, their spouse and minor children have the majority stake of around 46. 25 percent in the company followed by local general public holding 29. 10 percent shares of the company. NIT & ICP account for 9. 96 percent shares of BWHL. The remaining shares are held by other categories of shareholders. Historical Performance (2021-26) Except for a year-on-year dip in 2023, BWHL’s topline posted growth over the period under consideration. Conversely, its bottomline plunged in 2023 and 2026. The company’s margins posted phenomenal growth in 2021 and 2022. In 2023, gross and operating margins plunged while net margin slightly improved. In 2024 and 2025, all the margins considerably rebounded. Gross margin continued to grow in 2026 while operating and net margins shrank. The detailed performance review of the period under consideration is given below. In 2021, BWHL posted a staggering 72. 52 percent year-on-year growth in its topline which clocked in at Rs. 1574. 82 million. Owing to monetary easing and revival of economic activity post COVID-19, auto industry boasted a strong turnaround in 2021. Strong agricultural yield also buttressed the demand of tractors during the year. This had a positive impact on the sales of BWHL in 2021. The sales of cars, truck/bus as well as tractor wheels posted an exciting growth of 23 percent, 133 percent and 144 percent respectively in 2021. The plant capacity utilization marginally grew from 42 percent in 2020 to 44 percent in 2021 despite robust demand. Maybe, the company had leftover finished goods inventory from previous years due to lackluster sales since 2018. Cost of sales grew by 67. 43 percent year-on-year in 2021. Gross profit rose by 107 percent year-on-year in 2021 and GP margin also greatly improved to 15. 43 percent from 12. 86 percent in 2020. Operating expense grew by 21 percent year-on-year in 2021 due to high outward freight charges as demand recovered. High salaries and wages also pushed up the operating expense in 2021. Increased provisioning for WWF and WPPF drove up other expense up by 488. 34 percent year-on-year in 2021. Other income also doubled in 2021 mainly on account of profit on treasury bills, sale of wastage materials as well as gain on sale of operating fixed assets. Operating profit multiplied by 459. 65 percent year-on-year in 2021 with OP margin clocking in at 9. 26 percent versus 2. 85 percent in 2020. Despite low discount rate during the year, finance cost magnified by 79. 18 percent year-on-year in 2021 due to expansion in BWHL’s loan book during the year. This resulted in debt-to-equity ratio of 18 percent in 2021 versus debt-to-equity ratio of 17 percent registered in 2020. BWHL’s bottomline grew by 432. 13 percent year-on-year in 2021 to clock in at Rs. 100. 68 million with NP margin of 6. 39 percent. EPS also surged to Rs. 7. 55 in 2021. 2022 was another exciting year for BWHL where it posted 76. 41 percent year-on-year rise in topline owing to rapid economic recovery which stimulated the automobile sales. Cars, truck/buses and tractor wheels posted sales growth of 110 percent, 34 percent and 54 percent respectively in 2022. BWHL’s plant capacity utilization increased to 76 percent in 2022. Cost of sales grew by 62. 68 percent due to Pak Rupee depreciation and commodity super cycle in the global market. However, with upward revision in prices and increased demand, gross profit posted a strong growth of 151. 64 percent in 2022 with GP margin climbing up to 22 percent – the level never seen since 2016. Operating expense grew by 29 percent year-on-year in 2022 due to hike in salaries and wages owing to inflation as well as high freight charges. Higher provisioning for WWF and WPPF coupled with high exchange loss culminated into 389. 77 percent increase in other expense in 2022. Other income slid by 6. 12 percent year-on-year in 2022 due to lesser gain on sale of operating fixed assets and unrealized loss on change in fair value of listed securities. Despite high expense, operating profit grew by 194. 53 percent year-on-year in 2022 with OP margin rising as high as 15. 45 percent. Regardless of high discount rate in 2022 due to multiple rounds of monetary tightening, BWHL’s finance cost slid by 5. 69 percent year-on-year as the company largely settled its long-term loans during 2022. The bottomline enlarged by 106. 83 percent year-on-year in 2022 to clock in at Rs. 208. 24 million with NP margin of 7. 5 percent. EPS flew to Rs. 15. 62 in 2022. After two blissful years, BWHL kicked off 2023 on a dismal note as its topline slid by 39. 68 percent year-on-year to clock in at Rs. 1675. 86 million. The sales of car, tractor and truck/bus wheels shrank by 55 percent, 53 percent and 43 percent respectively. Dwindling foreign exchange reserves resulted in import restrictions which created immense supply chain impediments for the OEMs and resulted in shut-down of their operations. On the other hand, tamed demand of automobile due to high prices, high discount rate and low purchasing power of consumers also hit the auto industry hard in 2023. Owing to lesser orders, BWHL also suspended its operations twice during 2023. Cost of sales tumbled by 37. 69 percent year-on-year due to depressed sales volume. This resulted in 46. 71 percent year-on-year slide in gross profit with GP margin moving down to 19. 45 percent in 2023. While distribution expense slumped by 14. 18 percent in 2023 due to lesser freight charges, administrative expense posted 3. 42 percent year-on-year uptick due to inflationary effect. BWHL squeezed its workforce from 217 employees in 2022 to 207 employees in 2023. Other expense inched down by 18. 69 percent in 2023 due to lower profit related provisioning which offset higher exchange loss incurred during the year. Other income posted 92. 52 percent year-on-year growth due to tremendous profit on treasury bills owing to high discount rate. Other income stood at 6 percent of BWHL’s topline in 2023 versus 1. 89 percent in 2022. Operating profit declined by 51. 72 percent year-on-year in 2023 with OP margin falling down to 12. 37 percent. Finance cost grew by 39. 81 percent year-on-year in 2023 on account of higher discount rate. Debt-to-equity ratio shrank to 15 percent in 2023 from 19. 88 percent in the previous year. BWHL recorded 34. 5 percent year-on-year slide in its net profit in 2023 which stood at Rs. 136. 406 million with EPS of Rs. 10. 23 and NP margin of 8. 14 percent. In 2024, BWHL posted 29. 75 percent year-on-year rise in its net sales which clocked in at Rs. 2174. 48 million. This was mainly on account of improvement in sales volume of tractor wheels in anticipation of robust wheat and cotton crops. Truck/bus wheels sales volume also greatly improved during the year due to improved demand from the assemblers while car wheels sales tumbled during the year due to costly auto financing rates and elevated car prices. The company passed on the onus of cost hike to its consumers, resulting in 43. 75 percent improvement in gross profit in 2024. GP margin also strengthened to 21. 55 percent in 2024. Selling & distribution expense spiked by 47 percent in 2024 due to higher freight charges and salaries of sales staff owing to improved sales volume. Administrative expense succumbed to inflationary pressure and surged by 28. 74 percent in 2024. BWHL also expanded its workforce from 207 employees in 2023 to 214 employees in 2024 which increased the payroll expense. The company recorded 37. 88 percent lower other expense in 2024 as no exchange loss was incurred during the year. Other income posted a phenomenal 51 percent year-on-year rise in 2024 to stand at 7 percent of BWHL net sales in 2024. Robust other income was the consequence of increased profit from investment in treasury bills as well as exchange gain recognized in 2024. BWHL’s operating profit improved by 71. 55 percent in 2024 with OP margin clocking in at 16. 36 percent. Finance cost stayed almost intact at the last year’s level despite higher discount rate. This was due to settlement of outstanding liabilities during the year. BWHL’s net profit picked up by 76. 43 percent in 2024 to clock in at Rs. 240. 665 million with EPS of Rs. 18. 05 and NP margin of 11 percent. In 2025, BWHL posted year-on-year growth of 6 percent in its net sales which clocked in at Rs. 2305. 24 million. While car and truck/buses wheel sales grew, tractor wheel sales dropped during the year owing to weaker farm income on the back of stressful agricultural economy. Improvement in car, trucks and buses wheel sales volume was due to stable exchange rates, decline in auto financing rates, lower inflation and increased remittances which improved the overall macroeconomic scenario. Cost of sales ticked up by 1. 89 percent in 2025 due to higher energy tariff and increased prices of raw materials. However, improved demand, change in sales mix and higher prices resulted in 21 percent rebound in gross profit in 2025 with GP margin clocking in at 24. 60 percent. Selling & distribution expense went down by 19. 80 percent in 2025 due to lower sales volume of tractor wheels resulting in lesser freight charges. Conversely, administrative expense ticked up by 0. 48 percent in 2025 owing to inflationary pressure. Other expense grew by 69. 62 percent in 2025 on the back of increased provisioning done for WWF and WPPF, exchange loss and unrealized loss on equity securities at FVTPL. Other expense was conveniently offset by 4. 50 percent higher other income recorded in 2025 which was the result of profit on investment in government treasury bills, capital gain on listed securities and reversal of liabilities no longer payable. BWHL recorded 29 percent growth in its operating profit in 2025 with OP margin clocking in at 19. 91. Finance cost tapered off by 53. 56 percent in 2025 due to lower discount rate and lower outstanding liabilities. Net profit strengthened by 31. 13 percent to clock in at Rs. 315. 582 million in 2025. This translated into EPS of Rs. 23. 67 and NP margin of 13. 69 percent in 2025. Recent Performance (2026) In 2026, BWHL recorded 26. 51 percent year-on-year growth in its net sales which clocked in at Rs. 2916. 38 million. This was due to robust demand from car assemblers on the back of lower discount rate and inflation and improved macroeconomic conditions. Sale of truck/buses wheels also grew during the year on the back of axle load requirement and greater commercial activity in the country. Conversely, weaker farm economics due to floods resulted in decline in the sale of tractor wheels in 2026. Cost of sales surged by 20 percent in 2026 due to increased sales volume, however, with sales mix in favor of high-margin portfolio, BWHL recorded 46. 49 percent stronger gross profit in 2026 with GP margin clocking in at 28. 49 percent. Selling & distribution expense mounted by 27. 59 percent in 2026 while administrative expense surged by 30. 67 percent in 2026 due to enhancement of the company’s operations and sales volume. Increased provisioning for WWF and WPPF resulted in 80. 77 percent higher other expense in 2026. On the contrary, other income fell by 25. 90 percent in 2026 due to decline in the company’s short-term investments during the year. BWHL recorded 26. 20 percent greater operating profit in 2026, however, OP margin slightly dipped to 19. 86. Finance cost mounted by 11. 44 percent in 2026 despite monetary easing for most part of the year. This was due to higher lease liabilities outstanding at the end of the year. Net profit nosedived by 0. 95 percent to clock in at Rs. 312. 592 million in 2026. This translated into EPS of Rs. 23. 44 and NP margin of 10. 72 percent in 2026. Future Outlook Higher fuel prices, reversal of monetary easing cycle and supply chain disruptions in the aftermath of the Middle East crisis may take its toll on the automobile sales. This could have a direct negative effect on the sale of BWHL.

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