⚡ Flash Summary

Al-Khair Gadoon’s Q1 2025 (ended September 30, 2025) shows a slight revenue decrease compared to the same quarter last year. While net sales declined marginally by 1.77% (Rs. 4.999 million), the company swung to a net loss of Rs. 10.212 million versus a net loss of Rs. 0.133 million in Q1 2024. The decline in profitability is attributed to reduced sales volume, increased input costs, and inflationary pressures affecting margins. Management focuses on cost optimization, operational efficiency, and revenue diversification to improve performance.

📌 Key Takeaways

• 📉 Net sales decreased marginally by Rs. 4.999 million (1.77%) to Rs. 277.785 million compared to Rs. 282.785 million in Q1 2024.
• 📉 Gross profit declined to Rs. 31.083 million from Rs. 34.201 million in the same quarter last year.
• ❗ The company reported a net loss of Rs. 10.212 million, a significant swing from a net loss of Rs. 0.133 million in Q1 2024.
• ⬆️ Administrative expenses increased to Rs. 15.216 million from Rs. 10.685 million year over year
• ⬆️ Distribution expenses increased to Rs. 12.069 million from Rs. 9.857 million year over year
• 💸 Finance costs decreased to Rs. 10.592 million from Rs. 11.033 million year over year
• 😔 Earnings per share after tax is negative (loss of Rs 1.02 per share) versus a loss of Rs. 0.01 per share in Q1 2024.
• 🌱 Management is optimistic that efficiency initiatives and portfolio innovation will improve future profitability.
• ⚠️ The company faces challenges from increased cost pressures, market volatility, and rising inflation.
• 💲 The company maintains strong operational control and is implementing strategic measures to restore profitability.
• 🏭 The foam industry is highly vulnerable to global market fluctuations due to reliance on imported raw materials.
• 🏦 The company has access to finance facilities from Bank Alfalah and Habib Metropolitan Bank Limited.
• 📜 Commitments in respect of letters of credit for raw materials were Rs. 95.056 million.
• 🤝 There were no related party transactions during the period.

🎯 Investment Thesis

Given the recent financial performance, I recommend a HOLD rating on Al-Khair Gadoon. While management is taking steps to improve efficiency and profitability, the company faces significant challenges in the short term. I would assign a target price by comparing the performance against similar companies. Time horizon is medium term, 1 year.