⚡ Flash Summary

Khalid Siraj Textile Mills Limited (KSTM) held a corporate briefing session for the year ended June 30, 2025. The company’s financial performance has been poor, with significant losses reported for the year 2025 compared to previous years. Total assets have decreased, and shareholders’ equity is negative. The management remains optimistic about future performance, citing potential benefits from government policies and the IMF bailout package.

📌 Key Takeaways

• 📉 KSTM reported a net loss of Rs -19.32 million in 2025, compared to a loss of Rs -13.72 million in 2024.
• ❌ Profit/Loss before taxation was Rs -24.59 million in 2025, significantly down from Rs -6.95 million in 2024.
• Revenue was Rs 0.00 million in both 2025 and 2024, indicating no sales during the year.
• 💸 Other operating income decreased drastically to Rs 0.00 million in 2025 from Rs 20.41 million in 2024.
• 📊 Administrative and general expenses decreased slightly to Rs 3.26 million in 2025 from Rs 3.39 million in 2024.
• 🏭 Other operating expenses decreased to Rs 21.25 million in 2025 from Rs 23.58 million in 2024.
• 💰 Finance costs increased to Rs 0.08 million in 2025 from Rs 0.12 million in 2024.
• 📉 Total assets decreased to Rs 303.065 million in 2025 from Rs 324.307 million in 2024.
• 📉 Shareholders’ equity is negative, with Rs -77.244 million in 2025 compared to Rs -57.922 million in 2024.
• 📉 Break-up value per share is negative at Rs -7.22 in 2025, compared to Rs -5.41 in 2024.
• 📉 Earning per share (basic) is negative at Rs -1.81 in 2025, compared to Rs -1.28 in 2024.
• ⚠️ The company faces challenges including stiff competition, removal of subsidies, devaluation of the Pakistani Rupee, and higher markup rates due to inflation.
• 🌍 Potential risks include US & EU cutting imports of textiles from Pakistan.

🎯 Investment Thesis

Given the deteriorating financial performance, negative equity, and challenging economic environment, a SELL recommendation is warranted. There is no clear path to profitability or recovery in the short to medium term. The price target is significantly below current levels, reflecting the substantial risks and financial distress.