⚡ Flash Summary

Feroze1888 Mills Ltd. reported an increase in profit after tax for the quarter ended September 30, 2025, reaching Rs. 40.685 million compared to Rs. 2.694 million in the same period last year. This improvement is attributed to increased sales revenue and reduced finance costs. The company’s sales-net increased to Rs. 17,255.5 million from Rs. 15,702.91 million. While the economic outlook remains stable, the textile sector faces challenges including uncompetitive energy tariffs and higher taxation compared to regional counterparts.

📌 Key Takeaways

• 🚀 Profit after tax increased significantly to Rs. 40.685 million from Rs. 2.694 million year-over-year.
• 📈 Sales-net rose to Rs. 17,255.5 million compared to Rs. 15,702.91 million in the prior year.
• 💰 EPS increased to Rs. 0.10 per share from Rs. 0.01 per share.
• 🌍 Pakistan’s economy showed signs of stabilization, though impacted by severe floods.
• ⚠️ Inflation increased to 5.6% in September 2025, up from 3% the previous month.
• 🏭 The LSM sector recorded positive growth of 9% YoY in July 2025.
• 📉 Gross profit decreased to Rs. 2,080.422 million from Rs. 2,226.350 million.
• 💸 Finance cost decreased from (910,243) to (586,013).
• 📊 Textile exports increased by 5.5% YoY to US$$4.77 billion in Q1 2025.
• 🚧 The policy rate remains unchanged at 11%, with a slight uptick expected in inflation due to energy prices.
• 🤝 Ongoing staff-level agreement with the IMF for US$1.2 billion under its US$7 billion EFF and RSF will be crucial for stabilizing the economy.
• 棉花 Cotton output increased by around 40% year-on-year, providing relief to the textile industry.
• Worker remittances rose by 7% to US$6.4 billion during the first two months.

🎯 Investment Thesis

HOLD. The company has shown improved profitability and sales revenue. However, challenges persist in the textile sector, and caution is warranted. Further monitoring of the company’s performance and economic conditions is advisable. Price target: Rs. 3.50, Time horizon: 6-12 months. This takes into account the slight EPS improvement but also external risk factors.