⏸️ GATI: HOLD Signal (6/10) – Transmission of Quarterly Report for the Period Ended September 30, 2025

📌 Key Takeaways

• 📈 Net sales increased by 23% to Rs. 7,242 million compared to Rs. 5,905 million in the previous corresponding period.
• 📉 Loss before levies and income tax amounted to Rs. 304 million, a significant improvement from a loss of Rs. 765 million in the same period last year.
• 🚫 Loss after income tax was Rs. 395 million.
• 🏭 Operating profit was Rs. 44 million for the reporting quarter.
• ⛔ Challenges persist due to the dumping of imported yarn at exceptionally low prices.
• ✅ National Tariff Commission (NTC) imposed final Anti-Dumping Duties (ADD) on Polyester Filament Yarn (PFY) from major Chinese exporters.
• 🛡️ Focus is now on effective enforcement and collection of duties or bank guarantees in case of stay orders.
• 🚧 Over Rs 10 billion in anti-dumping duties still remain evaded/not paid in the case of PFY for the period 2017 to 2023.
• 📉 Persistent dumping and evasion of dumping duty have compelled the Company to operate at substantially diminished capacity utilization.
• ⚙️ Aim is to increase operating rates without increasing inventory and carrying costs.
• ⚡ Increased energy costs are affecting the polymer costing heavily.
• 📉 Distribution and selling expenses decreased by 32%.
• 📉 Administrative expenses decreased by 28%.
• 📉 Finance costs also decreased by Rs. 157 million.
• 📉 Loss per share is Rs. 3.63.

🎯 Investment Thesis

Given Gatron’s ongoing losses, the challenges posed by dumping, and increased energy costs, a HOLD recommendation is appropriate. While the company is making strides in increasing sales and reducing expenses, it needs to demonstrate sustained profitability and overcome the challenges posed by imported competition. The implied valuation impact appears negative, and a neutral position reflects these concerns.