⚡ Flash Summary

Sindh Modaraba’s annual report for 2025 indicates a mixed financial performance. While the Islamic financing portfolio experienced substantial growth of 124.18%, the net profit after tax decreased from Rs. 201.33 million to Rs. 180.12 million, influenced by the State Bank of Pakistan’s policy rate reduction. The company saw a significant increase in Shariah-compliant disbursements, which increased four times compared to the previous year, reflecting strong demand for its products and growing customer confidence. Despite resilience in a challenging economic environment, strategic initiatives resulted in a 35.41% increase in operating expenses, highlighting the need for continued prudence and strategic foresight.

📌 Key Takeaways

• 📈 Islamic financing portfolio grew by 124.18% year-over-year.
• 💰 Net profit after tax decreased to Rs. 180.12 million from Rs. 201.33 million the previous year.
• 🏦 The State Bank of Pakistan’s policy rate reduction impacted overall profitability.
• 💸 Total Shariah-compliant disbursements increased four times compared to last year.
• 💼 Operating expenses increased by 35.41% due to strategic team strengthening.
• 🌱 The company maintains a long-term and short-term credit rating of A+ and A-1, respectively.
• 🌍 Macroeconomic uncertainties pose challenges to the external environment.
• 🤝 The company aims to expand geographically and focus on digital transformation.
• 🌱 Focus on new financing products for SMEs, renewable energy, and agri-based enterprises.
• 📊 Board approves a cash dividend of 13.50% (Rs. 1.35 per certificate), up from 12.50% last year.
• 🏦 Rs. 36.02 million appropriated to statutory reserve
• 🛡️ The Company demonstrates a solid balance sheet with strong equity
• ♻️ESG Framework to improve environmental and social impact.
• 🤝Waseem Mehdi Syed and Abdul Rauf Chandio continue to head Modaraba with Chairman and CEO respectively.

🎯 Investment Thesis

Recommendation is HOLD. While the company shows commitment to Islamic finance and has an increasing portfolio, revenue declined which is concerning. The increasing dividend is a positive.