⚡ Flash Summary
Cherat Packaging Limited (CPPL) reported unaudited financial results for the three-month period ended September 30, 2025. Revenue increased modestly by 4.5% year-over-year, primarily driven by higher sales in the flexible packaging segment. However, net profit declined significantly from Rs. 131.03 million to Rs. 16.16 million. The company is investing in a new extrusion plant and solar panels to improve capacity and reduce costs, but profitability was impacted by increased competition and other expense this quarter. Management remains focused on optimizing production and expanding into new market segments.
📌 Key Takeaways
- ⬆️ Revenue increased by 4.5% to Rs. 3,368.46 million compared to Rs. 3,223.03 million in the same period last year.
- 📉 Net profit decreased significantly to Rs. 16.16 million, a substantial drop from Rs. 131.03 million in the corresponding period of 2024.
- 💸 Earnings per share (EPS) decreased dramatically to Re. 0.33 from Rs. 2.67 year-over-year.
- ⚠️ Cost of sales increased to Rs. 3,133.52 million from Rs. 2,874.40 million, impacting gross profit.
- 🚧 Distribution costs increased from Rs. 78.24 million to Rs. 82.15 million.
- 🏢 Administrative expenses increased from Rs. 41.80 million to Rs. 49.84 million.
- 🌱 Other income decreased from Rs. 14.71 million to Rs. 8.83 million.
- 💰 Finance costs decreased substantially from Rs. 118.45 million to Rs. 80.84 million, benefiting from falling discount rates.
- 🏭 Company is investing Rs. 1.40 billion in a second extrusion plant expected to be completed by April 2026.
- ☀️ The company is also installing 2.7 MW solar panels to improve cost efficiency and environmental responsibility.
- 💼 Long-term investments increased from Rs. 1,551.65 million to Rs. 1,968.76 million.
- 🏦 Long-term financing decreased from Rs. 2,070.18 million to Rs. 1,903.94 million.
- 🌱 Capital commitments are Rs. 1,082.92 million
- 🏭 Segment assets for Flexible packaging division were 9,290.66 million, while bags division was 4,553.75 million
🎯 Investment Thesis
Given the significant decline in profitability and uncertainty regarding the timing of benefits from the new investments, a HOLD rating is appropriate. The company needs to demonstrate improved earnings and cost control before a more positive outlook can be justified. Price target: Undetermined, pending evidence of improved financial performance. Time horizon: Medium-term (6-12 months).
Disclaimer: AI-generated analysis. Not financial advice.