⚡ Flash Summary

Grays Leasing Limited (GLL) held a corporate briefing session for the year ended June 30, 2025. The company reported a decrease in gross revenue from operations, falling to PKR 24.404 million from PKR 30.515 million in 2024. Profit before and after tax also declined compared to the previous year. Despite the drop in profitability, shareholders’ equity increased from PKR 71.153 million to PKR 76.583 million. The company is navigating challenges such as decreasing interest rates and is focused on developing an ECL model as per IFRS 9.

📌 Key Takeaways

• 📉 **Revenue Decline:** Gross revenue decreased to PKR 24.404 million from PKR 30.515 million in 2024.
• 📉 **Profitability Drop:** Profit before tax fell to PKR 6.042 million, and profit after tax to PKR 5.546 million.
• ⬆️ **Equity Increase:** Shareholders’ equity increased from PKR 71.153 million to PKR 76.583 million.
• ✅ **IFRS 9 Compliance:** Working on developing an ECL model as per IFRS 9 for potential lease losses.
• ✅ **Recovery Efforts:** Sanctioned and recovered PKR 127.821 million and PKR 77.482 million, respectively, against gross investment.
• ⬆️ **Investment in Leases:** Gross investment in finance leases stands at PKR 510.094 million, up from PKR 496.854 million.
• ✅ **Net Investment Increase:** Net investment in finance leases increased to PKR 442.616 million from PKR 419.328 million.
• 📉 **EPS Decrease:** Earnings per share decreased from 0.361 to 0.258.
• ✅ **KIBOR Impact:** Reduced KIBOR rate (11-12%) makes financing/leasing attractive.
• ⚠️ **Risk Factors:** Challenges include limited awareness among SMEs/general consumers about NBFCs and geographic presence.
• ✅ **No Overdue Leases:** No leases currently running are overdue.
• ✅ **Provisioning Adequacy:** Bad portfolio (classified) has already been 100% provided for.
• ✅ **Used Car Financing:** Potential growth in leasing/financing of used vehicles due to government policy.
• ✅ **Restriction on Banking Sector:** Restriction on banking sector disbursal will help in generating the demand of leasing in the sector.

🎯 Investment Thesis

HOLD. The company’s financial performance has declined, but it is actively addressing regulatory requirements and strategic positioning with respect to auto-leasing. The company is navigating a challenging interest rate environment, with efforts to leverage used car financing opportunities. Price target: PKR 3.50, Time horizon: 12 months. This is based on book value per share.