⚡ Flash Summary

Mahmood Textile Mills Ltd. (MEHT) reported net sales of PKR 57 billion for FY25. EPS rose sharply to PKR 32.60, a significant increase of 291% from PKR 8.32. The company is focusing on sustainable textile manufacturing with initiatives such as organic cotton traceability and renewable energy investments. However, net profit faced downward pressure due to rising input costs and tax regime shifts. Despite the challenges, MTM’s long-term growth momentum appears robust, showing resilience in the textile sector.

📌 Key Takeaways

• Founded in 1935, Mahmood Group is one of Pakistan’s largest vertically integrated textile conglomerates.
• The company employs over 11,000 people 🧑‍🤝‍🧑 and exports to 72+ countries 🌍.
• Net Sales for FY25 reached PKR 57B 💰.
• Gross Profit for FY25 was PKR 7.9B, with a margin of 13.95%.
• EPS rose sharply from 8.32 to 32.60, representing a 291% increase 🚀.
• The company has invested in 17.6 MW renewable energy capacity 🔆.
• MTM has LEED Gold certifications, indicating a commitment to sustainability 🌱.
• Organic Cotton Traceability Program has been initiated 🌿.
• ERP and automation are being implemented across production lines ⚙️.
• The company has comprehensive CSR & Women Empowerment Initiatives 👩‍💼.
• Gross Profit saw substantial growth from FY’21 to FY’24, more than doubling from 4Bn to 10Bn; however, FY’25 experienced a drop to 8Bn, primarily due to cost and pricing pressures.
• Maintaining a Current Ratio above 1.0 across the period indicates robust short-term solvency 👍. Current Ratio is 1.08.
• Interest Coverage Ratio (ICR) is stable recently at 1.87 Times reflecting ongoing prudent financial management.
• Value Added Business Growth to continue at 35% with additional top line of $ 25 Min.
• Expansion of Renewable Energy in Solar & Biomass to maintain & reduce our cost to less than $ 10c.

🎯 Investment Thesis

HOLD. Mahmood Textile Mills demonstrates strong growth potential with a commitment to sustainability, but profitability challenges and external economic factors warrant a cautious approach. A ‘HOLD’ recommendation is appropriate until there’s more clarity on sustained profitability and the impact of their strategic responses. The robust expansion plans and focus on renewable energy are positive signs, but need to translate into improved financial performance.