⏸️ GEMPACRA: HOLD Signal (5/10) – Transmission of Quarterly Report for the Period Ended September 30, 2025

📌 Key Takeaways

• 📉 Revenue declined by 4% YoY, reaching PKR 114.4 million in Q1 FY26.
• 📉 Rating revenue also decreased by 4% due to spillover of some ratings.
• 💰 Operating profit decreased by 15% YoY, settling at PKR 35.7 million.
• 😔 Profit before tax plummeted by 38% YoY, coming in at PKR 38.5 million.
• 📉 Profit after tax dropped significantly by 40% YoY, recorded at PKR 26.7 million.
• 📉 Earnings per share (EPS) decreased from PKR 0.60 to PKR 0.36.
• ⬆️ Cost of revenue saw a slight increase, driven by higher infrastructure expenses.
• ❌ Q1 FY25 included a dividend income of approximately PKR 17 million from a subsidiary, not present in Q1 FY26.
• 🌱 Management focused on cost efficiency and expense discipline amid inflationary pressures.
• ✨ PACRA aims to strengthen its revenue base by expanding its credit rating portfolio.
• 📊 Diversification into new offerings such as ESG, performance, and social impact ratings is planned.
• 💻 Investments in digitalization and talent development are ongoing to enhance analytical depth.
• 💰 Differentiated pricing strategies and subscription-based models are being adopted to optimize profitability.
• 🤝 The board expressed appreciation to stakeholders for their continued trust and confidence.

🎯 Investment Thesis

HOLD. While PACRA is taking steps to diversify its revenue streams and optimize profitability, the current financial performance indicates a need for caution. A more detailed analysis of the company’s diversification efforts and their impact on future earnings is required before considering a BUY rating.