TPL Trakker (Private) Limited (PSX: TPLT) was incorporated in Pakistan in December 2016 as a private limited company. Previously it was known as TPL Vehicle Tracking (Private) Limited. The company is a subsidiary of TPL Corporation Limited while TPL Holdings (Private) Limited is the parent company of TPLT. The company is engaged in the installation and sales of vehicle tracking devices along with fleet management services. The company also provides Internet of Things (IoT) solutions to a wide range of industries. Some of the services offered by TPLT include cold chain monitoring, fuel monitoring, Genset monitoring, Driver Behavior monitoring, etc.

Pattern of Shareholding

As of June 30, 2024, TPLT has a total of 187.263 million shares outstanding which are held by 1331 shareholders. Associated companies have the majority stake of 64.8 percent in the company followed by Modaraba and Mutual Funds holding 14.23 percent stake in TPLT. The local general public accounts for 7.68 percent of shares of the company while the foreign general public holds 3.47 percent shares. The remaining shares are held by other categories of shareholders.

Historical Performance (2020-23)

The top line of TPLT has been growing in all the years under consideration except for a dip in 2020. That was the year when the company not only witnessed a drop in its revenue but also posted a negative bottom line. In 2021, TPLT posted the highest revenue growth among all the years under consideration, yet the bottom line stayed in the negative zone, however, the magnitude of losses receded. 2022 appears to be a blissful year for TPLT as it was able to post a net profit after two successive years of losses. In the following year, the topline continued to march up; however, the company couldn’t sustain its bottom line in the positive territory. In 2024, TPLT recorded a recovery in both its topline and bottomline. The margins of the company hit rock bottom in 2020 followed by a recovery in 2021 and 2022. In 2023, while gross and operating margins continued to improve, net margin hit the negative zone. TPLT’s margins registered a significant recovery in 2024. The detailed performance review of the period under consideration is given below.

In 2020 the company’s revenue plunged by 9.4 percent year-on-year on account of a massive decline in the sales of the automobile sector. The outbreak of COVID-19 not only restricted industrial and business activity but also put a dent in social activity. This resulted in drastically fewer contributions from automobile customers. Not only did the equipment installation and sales dip, but monitoring fees and rental from tracking devices also remained lackluster during the year. The sales decline was partially offset by the navigation fee and E-ticketing fee, as during the year, TPL Maps (Private) Limited and TPL Rupiya (Private) Limited were merged into TPLT. Cost of sales enlarged by 59.32 percent year-on-year in 2020, resulting in 61.87 percent thinner gross profit recorded by TPLT in 2020. GP margin dropped to 23.9 percent in 2020, against the GP margin of 56.7 percent recorded in the previous year. Lower business activity resulted in a curtailed distribution cost during the year. Administrative expenses also posted a marginal 0.57 percent growth, yet TPLT posted an operating loss worth Rs.92.38 million during the year as against the operating profit of Rs.349.99 million recorded in the previous year. Finance costs magnified by around 66.25 percent year-on-year in 2020 on the back of increased borrowings coupled with a high discount rate in the first three quarters of 2020. In 2020, TPLT’s gearing ratio posted a massive jump (see graph). Other income performed exceptionally well in 2020 and grew by 162.22 percent year-on-year in 2020 mainly on the back of income from related parties and non-financial assets. TPLT posted a massive net loss of Rs.458.52 million in 2020 as against the net profit of Rs.35.87 million recorded in the previous year. Loss per share stood at Rs.3.81 in 2020, against the EPS of Rs.0.30 that was posted in 2019.

In 2021, all the business segments of TPLT performed above expectations. Navigation revenue went up an extra mile to buttress the topline in 2021. The topline grew by 17.51 percent year-on-year in 2021. Cost of sales inched up by 4.74 percent year-on-year in 2021, resulting in a 58.22 percent rise in TPLT’s gross profit with GP margin climbing up to 32.1 percent. The company kept a strict check on its operating expenses which resulted in an operating profit of Rs.189.97 million with an OP margin of 10.1 percent in 2021. Research and development expenses grew by 237.52 percent in 2021. The low discount rate during the year enabled the company to cut down its finance cost by 24.41 percent year-on-year, yet finance cost was big enough to turn operating profit into a net loss of Rs.120.20 million in 2021. Loss per share stood at Rs.0.64 in 2021.

In 2022, TPTL recorded 11.68 percent year-on-year growth in its net sales. The connected car segment posted a 7 percent rise during the year while digital mapping and location services registered a phenomenal 21 percent growth in its revenues during 2022. TPLT recorded a 23.12 percent bigger gross profit in 2022 and a GP margin of 35.4 percent owing to a better sales mix, improved charges as well as cost control measures. Operating expenses grew in line with inflationary trends and also because of added employees in the workforce which took the tally to 901 in 2022 versus 809 in the previous year. Operating profit improved by 47.7 percent in 2022 and OP margin mounted to 13.3 percent. The company was also able to put brakes on its finance cost amidst a high discount rate, by squeezing its gearing ratio to 49.8 percent in 2022 versus the gearing ratio of 59.48 percent posted in 2021. This resulted in a net profit of Rs.197.12 million in 2022 with an NP margin of 9.4 percent in 2022 and EPS of Rs.1.05. TPLT posted the highest EPS and NP margin in 2022.

In 2023, TPLT’s topline inched up by 6.96 percent over last year. While monitoring fees and rentals from tracking devices continued to march up, navigation revenue drastically fell in 2023. Equipment installation and sales also declined during the year. The lackluster performance of the automobile and POL sectors were the main culprits behind the sluggish topline growth attained by TPLT in 2023. Gross profit grew by 12.67 percent year-on-year in 2023 on account of cost control measures resulting in a better GP margin of 37.3 percent. Distribution expense inched up by 6.41 percent year-on-year in 2023 on the back of higher payroll expenses, rent, rates, and taxes as well as computer expenses incurred during the year. While the company reduced its workforce from 901 employees to 811 employees in 2023, adjustments in minimum wage rate, higher legal and professional charges, vehicle running & maintenance as well as computer expense drove administrative expenses up by 7.89 percent in 2023. Operating profit picked up by 21.17 percent in 2023 with OP margin rising up to 15.1 percent. Finance costs soared by 63.86 percent in 2023 due to a higher discount rate. Finance cost was partially offset by 51 percent higher other income which was the consequence of higher mark-up income, the service fee charged from Astra Location Services (Private) Limited, and the account balance of TPL Properties Limited written off during the year. The company posted a net loss of Rs.42.27 million in 2023 with a loss per share of Rs.0.23.

In 2024, TPLT recorded a 12.85 percent year-on-year rise in its topline. Except for navigation revenue, all other segments i.e. equipment installation & sales, monitoring fee, rentals from tracking devices, and other services registered improvement in revenue. Cost of sales slid by 1.64 percent in 2024 despite higher revenue. This was the result of constant cost control initiatives put in place by the management. TPLT was able to record a 37.18 percent increase in its gross profit in 2024 with GP margin climbing up to 45.4 percent – the highest level achieved since 2020. Distribution expense ticked up by 0.73 percent in 2024 due to higher payroll expense which was greatly offset by the reduced sales promotion budget allocated for the year coupled with curtailed vehicle running & maintenance charges incurred during the year. Administrative expenses escalated by 12.61 percent in 2024 due to higher payroll expenses despite the fact that the company downsized its workforce from 811 employees in 2023 to 708 employees in 2024. Higher allowance booked for ECL also pushed up the administrative expense in 2024. TPLT recorded a 77.3 percent improvement in its operating profit in 2024 with OP margin rising up to 23.7 percent. Other expenses mounted by 63.46 percent in 2024 due to higher provisions booked against dues from related parties. R&D expense also ticked up by 3.59 percent in 2024. Finance costs dropped by 3.87 percent in 2024 due to fewer outstanding borrowings recorded during the year. This resulted in TPLT’s gearing ratio falling to its lowest level of 38.47 percent in 2024. Other income slid by 19.96 percent in 2024 due to lower markup income earned from the current account no gain recorded on sales of fixed assets and no amortization of government grants recorded during the year. TPLT recorded a net profit of Rs.135.024 million in 2024 which translated into EPS of Rs.0.72 and an NP margin of 5.3 percent.

Future Outlook

With the core revenue driver of TPLT i.e. auto sector being under pressure, the company is diversifying its business portfolio to continue growing in the face of economic and political headwinds. Digital location and mapping and Industrial IoT will continue to provide growth impetus to the company in the face of grappling with tracking revenue. Besides, the company is also expanding its international revenue mix. The company also launched its ever-consumer navigation app which aims to focus on the pain points in Pakistan such as fuel consumption, optimized cost routing, improved navigation tools, etc. With an augmented level of diversification, TPLT is expected to boast sustained performance and rebounding margins in the coming times.