⚡ Flash Summary

Shahzad Textile Mills Limited (SZTM) reported a profitable quarter, reversing losses from the same period last year. Sales increased significantly, driving the improved financial performance. The company achieved a net profit of PKR 66.008 million, a stark contrast to the PKR 28.746 million loss in the prior year. Earnings per share (EPS) also reflected this turnaround, rising to PKR 3.67 from a loss of PKR 1.60 per share. However, cash flow from operating activities remains negative.

📌 Key Takeaways

• 📈 Sales surged to PKR 3,354.647 million, up from PKR 2,227.070 million in the same quarter last year.
• 💰 Net profit soared to PKR 66.008 million, compared to a loss of PKR 28.746 million in the prior year.
• ⭐ Earnings per share (EPS) increased to PKR 3.67, a significant improvement from a loss of PKR 1.60.
• 📊 Gross profit increased substantially to PKR 282.235 million from PKR 115.139 million.
• ⚠️ Operating profit improved significantly to PKR 127.504 million from a loss of PKR 10.877 million.
• 💸 Finance costs decreased to PKR 22.134 million compared to PKR 33.721 million.
• 🏦 Operating cash flow is negative at PKR (47.726) million, lower than prior year’s PKR (223.349) million.
• 📉 Cash and cash equivalents increased to PKR 491.378 million from PKR 386.233 million at the beginning of the period.
• ✔️ Total Equity increased to PKR 3,598.564 million from PKR 3,532.556 million as of June 30, 2025.
• 🏭 Property, plant, and equipment increased to PKR 2,788.547 million from PKR 2,721.486 million.
• 🧾 Trade and other payables increased to PKR 1,036.870 million from PKR 935.371 million.
• ❗ No cash dividend, bonus shares, or right shares were recommended by the board.
• ✅ Short term borrowings increased to PKR 1,075.305 million from PKR 871.519 million

🎯 Investment Thesis

Based on the improved financial performance, a HOLD recommendation is appropriate for SZTM. The company has demonstrated a strong turnaround in profitability and revenue growth. However, the negative operating cash flow is a cause for concern, and requires careful monitoring. A price target of PKR 80, with a time horizon of 12 months, is suggested, contingent on the company improving its cash flow generation and maintaining its revenue growth trajectory.