⚡ Flash Summary

Sapphire Textile Mills Limited’s (SAPT) annual report for the year ended June 30, 2025, reveals a mixed financial performance. Revenue increased by 13.18% to Rs. 93.259 billion, driven by higher sales of value-added products. However, profit after tax decreased to Rs. 3.951 billion, primarily due to a change in tax regime and decreased dividend income from the energy segment. The company plans to focus on innovation, operational efficiency, and renewable energy investments to remain competitive amidst structural challenges in Pakistan’s textile industry.

📌 Key Takeaways

• 🚀 Revenue up 13.18% to Rs. 93.259 billion
• 📉 Profit after tax dips to Rs. 3.951 billion
• ✅ Gross profit margin stable at 13.65%
• ❌ Other income declines significantly from Rs 5.895 billion to Rs. 3.434 billion.
• ⬇️ Earnings per share drop to Rs. 182.16
• 💰 Recommended final dividend of Rs. 25.50 per share
• ⬆️ Taxation expenses increased due to tax regime change.
• 💡 Deferred tax expense of Rs. 574 million recognized.
• ✔️ Finance costs reduced due to lower policy rates.
• ⚡ Investment in renewable energy continues.
• 💪 Strong focus on sustainability and ethical practices.
• 👍 Continued investment in textile retail operations.
• ⚠️ High energy costs and taxation remain key industry challenges.
• ✔️ Effective risk management framework implemented.

🎯 Investment Thesis

Given the mixed financial performance, with strong revenue growth offset by declining profits due to external factors, a HOLD recommendation is appropriate at this time. The company must address structural issues related to energy costs and domestic cotton production. A price target cannot be calculated due to the lack of future data on financials. We recommend that an analysis should be revisited in 12 months when economic conditions are more stable.