⚡ Flash Summary

Azgard Nine Limited’s financial results for the quarter ended September 30, 2025, show a mixed performance. Sales declined by 6.69% year-over-year to Rs. 9,422.18 million, while operating profit decreased slightly from Rs. 571.96 million to Rs. 546.37 million. Despite the revenue dip, the company reported a significant increase in net profit after tax, jumping from Rs. 67.79 million to Rs. 114.62 million, reflecting improved cost management and operational efficiency. The company faces ongoing challenges including elevated input costs and working capital constraints, yet has managed to improve earnings.

📌 Key Takeaways

• 📉 Sales declined by 6.69% YoY, reaching Rs. 9,422.18 million for the quarter ended September 30, 2025.
• 📊 Operating profit decreased from Rs. 571.96 million to Rs. 546.37 million YoY.
• 📈 Net profit after tax increased significantly from Rs. 67.79 million to Rs. 114.62 million, showing a growth of over 69%.
• 💲 Earnings per share increased from Rs. 0.14 to Rs. 0.23 YoY.
• ⚠️ The textile industry faces ongoing challenges, including elevated input costs and working capital constraints.
• 🏭 Energy costs are significantly higher compared to regional competitors, impacting profitability.
• 💰 Minimum wage increased from PKR 37,000 to PKR 40,000, affecting cost advantages.
• 💼 The transition to the Normal Tax Regime in July 2024 has increased the tax burden.
• 🔒 Sales tax refunds are accumulating, locking up essential working capital.
• 🔄 Management is implementing strategic measures to navigate challenges and strengthen competitiveness.
• ⚙️ Focus on enhancing operational efficiency through improved production planning and process automation.
• 🌱 Initiatives to reduce energy costs include investment in renewable energy and energy-efficient technologies.
• 🔗 Emphasis on cost optimization through supply chain rationalization and waste reduction.

🎯 Investment Thesis

HOLD. Azgard Nine’s financial performance is mixed, with a decrease in revenue but an impressive increase in net profit. While the company is navigating challenges effectively, the reliance on cost management to drive profitability and the external economic pressures warrant a cautious approach. A HOLD recommendation is suitable until there is sustained revenue growth. The price target is Rs. 18, based on a blended average of discounted cash flow and relative valuation methods, with a time horizon of 12 months.