⚡ Flash Summary

Merit Packaging Limited reported a decrease in net revenue for the quarter ended September 30, 2025, primarily due to the disposal of its Gravure division. Despite the revenue decline, the company achieved a net profit of PKR 472 million (EPS: Rs. 2.36) compared to a net loss of PKR 35 million (LPS: Re. 0.17) in the same period last year, mainly due to a gain on the sale of Gravure machines. Excluding this gain, the company would have reported a loss of Rs. 33 million. Management is focused on implementing strategies to enhance the company’s resilience and operational readiness.

📌 Key Takeaways

• 📉 Net Revenue decreased by 38.36% to PKR 937 million compared to the same period last year, primarily due to the disposal of the Gravure division.
• 💰 Operating Profit decreased from Rs. 36 million to Rs. 13 million year-over-year.
• ✅ Gain on sale of Gravure machines: The company realized a gain of Rs. 506 million from the sale of Gravure machines.
• 💸 Financial charges decreased to Rs. 35 million from Rs. 52 million, driven by reduced utilization of running finance facility.
• 📈 Profit before levies reached Rs. 484 million, compared to a loss of Rs. 16 million in the same quarter last year.
• ⭐ Net profit stood at PKR 472 million (EPS: Rs. 2.36) compared to a net loss of PKR 35 million (LPS: Re. 0.17) last year.
• 🛑 Without the gain on disposal of gravure machines, the company would have experienced a loss of Rs. 33 million.
• 💵 Proceeds from the sale of Gravure machines amounted to Rs. 800 million, with a remaining Rs. 200 million expected in Q2 FY26.
• Competitive market: The packaging industry remains competitive.
• Assets: Total assets decreased slightly from PKR 5,016.741 million to PKR 4,871.509 million.
• Equity: The company’s equity increased from PKR 2,272.065 million to PKR 2,744.061 million.
• Long-term financing: Long-term financing decreased slightly from PKR 133.617 million to PKR 131.965 million.
• Short-term borrowings: Short-term borrowings significantly decreased from PKR 841.327 million to PKR 324.348 million.
• Basic and diluted earnings per share: Increased from a loss of (0.17) rupees to an earning of 2.36 rupees

🎯 Investment Thesis

Hold. The company’s performance is heavily reliant on a one-time gain. Need to observe trends and how the business shifts in the coming quarters to formulate a better rating. Although there is a shift in the bottom line and an increased EPS, these may not be sustainable as the revenue and operating profit have decreased. Wait and see if the strategies put in place by management enhance the resilience and operational readiness for the business.