⚡ Flash Summary

Suraj Cotton Mills Limited (SURC) reported a robust performance for the first quarter ended September 30, 2025, with a net profit of PKR 396 million, marking a 110.09% increase compared to PKR 186 million in the same period last year. Earnings per share (EPS) rose significantly from PKR 3.83 to PKR 8.12. Profitability was bolstered by higher other income from investment activities, favorable equity market performance, and higher dividend income. However, sales declined by 14.64% due to lower sales volumes amid weak market demand, leading to an increase in finished goods inventory.

📌 Key Takeaways

• ✅ Net profit surged by 110.09%, reaching PKR 396 million, up from PKR 186 million year-over-year.
• 📈 Earnings per share (EPS) increased to PKR 8.12 from PKR 3.83, reflecting strong financial health.
• 💰 Sales declined by 14.64% to PKR 6.49 billion from PKR 7.60 billion due to lower sales volumes.
• 📊 Gross profit remained stable at PKR 488 million compared to PKR 485 million in the previous year, indicating consistent margins.
• 📉 Finance costs decreased by 35.82%, from PKR 61 million to PKR 39 million, due to lower borrowings and improved liquidity management.
• 💼 Operating profit increased significantly by 57.51%, rising to PKR 607 million from PKR 386 million.
• 🌱 Other income increased significantly, contributing PKR 303 million compared to PKR 112 million in the same quarter last year.
• 📦 Finished goods inventory increased, reflecting slower offtake in both local and export markets.
• 🌐 Export revenue from 2024 to 2025 decreased from 4,118,953 to 3,550,529 (thousands of PKR).
• 🏭 Local revenue from 2024 to 2025 decreased from 3,483,952 to 2,939,370 (thousands of PKR).
• 🌱 Trade debts from 2024 to 2025 decreased from 3,220,558 to 3,090,943 (thousands of PKR).
• 🏦 Cash and bank balances from June 30 to September 30, 2025 decreased from PKR 163.444 million to PKR 93.916 million.

🎯 Investment Thesis

BUY. The company’s strong profit growth and effective cost management make it an attractive investment, despite the sales decline. Modernization and efficiency improvements position the company well to navigate industry challenges. Price target: PKR 10.00, Time horizon: Medium Term.