⚡ Flash Summary

Sitara Chemical Industries Limited (SCIL) reported a 4.09% increase in net sales, reaching PKR 7,918 million for the first quarter of 2025-26, compared to PKR 7,607 million in the same period last year. Gross profit increased by PKR 206 million to PKR 1,378 million. The improvement in gross margin was driven by lower electricity costs and a decrease in international coal prices. Consequently, SCIL achieved a profit after tax of PKR 349 million, significantly higher than the PKR 155 million in the corresponding quarter of the previous year, resulting in an EPS of PKR 16.29 compared to PKR 7.25.

📌 Key Takeaways

• 🚀 Net sales increased by 4.09% to PKR 7,918 million compared to PKR 7,607 million in the previous year.
• 💰 Gross profit rose by PKR 206 million, reaching PKR 1,378 million.
• ⚡️ Improved gross margin due to lower electricity costs and reduced international coal prices.
• 📉 Financial expenses decreased to PKR 349 million from PKR 608 million due to lower borrowing rates.
• 🧵 Stable textile segment performance with consistent yarn and fabric sales.
• 📈 Profit after tax surged to PKR 349 million from PKR 155 million.
• ⭐ Earnings Per Share (EPS) increased significantly to PKR 16.29 from PKR 7.25.
• 🏭 New 50 MW coal-fired power plant commissioning is underway.
• 🏦 Expectation of a favorable business outlook due to reduced energy costs and stable monetary policy.
• ⚠️ Potential risk of food inflation due to recent flooding may pressure macroeconomic growth.
• 🌱 The company is Shariah Compliant Company certified by SECP.
• 🤝 Board acknowledges shareholders, customers, suppliers, financial institutions, and employees.

🎯 Investment Thesis

Considering the improved financial performance, especially the substantial increase in EPS and profit after tax, alongside a stable textile segment and reduced financial expenses, a BUY signal is warranted. The forthcoming commissioning of the new power plant could further reduce energy costs and boost profitability. Target price can be estimated after a full financial report. The time horizon is MEDIUM_TERM as the benefits of new power plant and stable monetary policy are expected to materialize over the coming quarters.