⚡ Flash Summary

DS Industries Limited (DSIL) reported a challenging financial year ending June 30, 2025, marked by a significant decrease in sales and a shift to a gross loss due to high raw material and input costs. Despite these operational difficulties, the company managed to post a profit after tax, driven mainly by its share of profit from an associate. The directors acknowledge the ongoing business struggles and are exploring alternative business strategies to ensure the company’s viability. However, the auditor has flagged concerns regarding the recognition of deferred tax assets, and there are also going concern doubts.

📌 Key Takeaways

• 📉 Revenue plummeted to Rs. 3.78 million in FY25, a staggering drop from Rs. 29.17 million in FY24.
• ⚠️ Gross profit turned into a loss of Rs. 0.11 million in FY25, compared to a profit of Rs. 7.9 million in FY24, indicating severe cost pressures.
• ✅ Despite operational struggles, DSIL reported a profit after tax of Rs. 5.25 million, primarily due to its share of profit from an associate.
• 🔍 Auditor qualified the report due to concerns regarding the recognition of deferred tax assets.
• ❗ Accumulated losses stand at a substantial Rs. 582.26 million as of June 30, 2025.
• 💼 Management is actively seeking new business options, but these plans are yet to be finalized.
• ⛔ No dividend was declared for the year due to adverse operating results and accumulated losses.
• 🏦 The company relies on interest-free loans from related parties, amounting to Rs. 56.50 million.
• 🤔 The auditors have expressed material uncertainty about the company’s ability to continue as a going concern.
• 👍 Chief Executive acquired 6,500,000 shares from the market, showing confidence in the company’s future, while another director, Hassan Ibrahim Ahmed sold shares.

🎯 Investment Thesis

Based on the concerning financial performance and auditor qualifications, a HOLD recommendation is appropriate at this time. While the company has reported profit after tax, it remains dependent on income from an associate. The situation warrants close monitoring. Do not add to your position, but also do not sell until there is more certainty of the company’s future prospects.