⚡ Flash Summary

Ellcot Spinning Mills Limited (ESML), a part of Nagina Group, presented its Corporate Briefing Session for 2024-25. The company reported a YoY increase in sales, with revenue rising from PKR 15,510.705 million in 2024 to PKR 15,886.089 million in 2025. However, profit for the year decreased significantly from PKR 152.980 million to PKR 76.618 million. This decline was primarily attributed to the recognition of deferred tax expense and super tax, impacting overall profitability despite improved revenues.

📌 Key Takeaways

• 🏭 Ellcot Spinning Mills Ltd. is part of the Nagina Group, founded in 1967.
• 🗓️ The company was incorporated in Pakistan on December 22, 1988.
• 🧶 ESML’s primary business is manufacturing and selling yarn.
• 📊 Sales increased from PKR 15,510.705 million in 2024 to PKR 15,886.089 million in 2025.
• 📉 Profit for the year decreased from PKR 152.980 million in 2024 to PKR 76.618 million in 2025.
• 💸 Finance costs decreased by 31.26% year-over-year.
• 🌱 Increase as a result of returns generated from short-term investments in mutual funds by 19.68%.
• ⚠️ Profit before levies and taxation grew by 27.30% year-over-year.
• ⚠️ Balance sheet shows significant increase in short-term borrowings (+427.93%) due to higher raw material procurement.
• 📈 Stock-in-trade increased by 49.20%, reflecting elevated inventory levels.
• 📉 Short-term investments decreased substantially by 80.18% due to sale of mutual funds.
• 🏢 Total number of spindles installed remains constant at 79,200.
• 👨‍💼 Total number of employees increased from 878 to 904.
• ⚠️ Cotton crop experienced a severe contraction due to climate change issues.
• 📉 EPS declined from Rs. 13.97 to Rs. 7.00.

🎯 Investment Thesis

HOLD. While the company has shown some revenue growth, the significant decline in profitability and EPS raises concerns. The increased reliance on short-term borrowings also adds financial risk. Given these factors, a HOLD recommendation is appropriate until the company demonstrates improved profitability and manages its financial risks more effectively. A BUY recommendation could be considered if the company can mitigate these challenges and show consistent profit growth.