⚡ Flash Summary

Chenab Limited’s unaudited financial statements for Q1 2025-2026 reveal a challenging business environment. The company reported sales and services revenue of Rs. 447.705 million, but also a significant financial loss of Rs. 163.174 million before levies and income tax. Management is attempting to reverse winding-up proceedings via a Scheme of Arrangement, with positive impacts expected from strategic measures and favorable conditions in the American market. The directors are confident that the company will continue as a going concern through management actions to improve financial results and strategic partnerships to take advantage of available opportunities.

📌 Key Takeaways

• 📉 Chenab Limited reported a financial loss of Rs. 163.174 million for the quarter ended September 30, 2025.
• 💰 Sales and services revenue reached Rs. 447.705 million during the same period.
• 🇺🇸 US tariffs on Chinese and Indian imports provide a competitive advantage for Pakistani textiles in the American market.
• 🏭 The company has significant capacity to source textiles, especially home textiles.
• 🏦 Banks are expected to provide sufficient financial limits for exports to aid the company’s growth.
• 🤝 Sponsors are committed to injecting funds to meet working capital requirements.
• ⚖️ A Scheme of Arrangement under sections 279 to 283 of the Companies Act, 2017 has been filed to reverse winding-up proceedings.
• ✅ The scheme was approved by 100% of shareholders and 90.40% of secured creditors.
• 📅 The Court approved the scheme on September 14, 2021, and issued the reversal order on October 29, 2021.
• 🏢 Non-core assets were sold for Rs. 1.6 billion to service loan repayments and support working capital.
• 🗓️ Principal repayments to lenders are rescheduled over 14 years to improve financial health.
• 🏦 The company seeks additional working capital from banks to ensure smooth operations.
• 💵 Sponsors injected Rs. 350 million through the sale of personal shares and Rs.578.97 million as a subordinated loan since its revival.
• ⚠️ The company was unable to meet key financial model assumptions due to rising overheads, energy costs, and PKR depreciation.

🎯 Investment Thesis

HOLD. Despite the positive developments regarding the Scheme of Arrangement and potential benefits from US tariffs, Chenab Limited faces significant financial and operational challenges that warrant a cautious approach. The company’s negative profitability, working capital issues, and high debt levels create substantial uncertainty. A hold recommendation is justified until the company demonstrates sustained improvements in financial performance and successful execution of its turnaround strategy. Further clarity is required on the company’s ability to stabilize operations, generate profits, and meet its financial obligations before considering a more optimistic investment stance.