⚡ Flash Summary

Orient Rental Modaraba (ORM) reported a 16% increase in gross turnover, reaching Rs. 2,460.4 million, primarily driven by its Operations & Maintenance segment. Net profit, however, decreased to Rs. 214 million due to rising tax rates and levies. The Board approved a cash dividend of 12%, or Rs. 1.2 per certificate. The company faces challenges such as uncertain gas supply, high maintenance costs, and increasing environmental regulations. The company’s financial position grew by 14% to Rs. 2,656.7 million despite the reduction in net profit.

📌 Key Takeaways

• ⬆️ Gross turnover increased by 16% to Rs. 2,460.4 million.
• 🛠️ Operations & Maintenance segment was the primary growth driver, contributing 23% to the increase.
• 📉 Net profit decreased to Rs. 214 million due to increased taxes and levies.
• 💰 Board approved a 12% cash dividend, or Rs. 1.2 per certificate.
• 💸 Total tax incidence computes to 49%.
• ❗ Finance Act 2025 raised withholding tax rates on rental and engineering services, further eroding after-tax profits.
• 🏦 State Bank’s policy rate reduction to 11% positively influences the economy and operations.
• ⚠️ Several factors continue to affect profitability, including uncertain gas supply, high maintenance costs, and regulatory requirements.
• 🌊 Recent floods placed significant pressures on businesses across the country, disrupting supply chains and operations.
• 💼 Board remains committed to pursuing new business opportunities to diversify revenue streams and tap into emerging markets.
• 📈 The Company’s assets grew by 14% to Rs 2,656.7 million.
• 🌐 The Company has a diversified portfolio.

🎯 Investment Thesis

Given the conflicting signals of increased revenue but decreased profit and significant risks, HOLD the ORM. The company is being affected by external problems, especially in Pakistani regulation.