⚡ Flash Summary

Pak Leather Crafts Limited (PAKL) reports a decrease in net sales from Rs. 89.395 million in 2024 to Rs. 60.094 million in 2025. Despite the sales decline, the company managed to increase its gross profit from Rs. 12.954 million to Rs. 13.961 million. The earnings per share increased slightly from Rs. 2.39 to Rs. 2.65. The company faces challenges due to international economic recession and high energy costs, but is trying to mitigate these risks through toll manufacturing agreements and renting out factory space.

📌 Key Takeaways

• 📉 Net sales decreased by approximately 33% from Rs. 89.395 million (2024) to Rs. 60.094 million (2025).
• 📈 Gross profit increased by 7.77% from Rs. 12.954 million (2024) to Rs. 13.961 million (2025).
• ⬆️ Earnings per share (EPS) rose by 10.88% from Rs. 2.39 (2024) to Rs. 2.65 (2025).
• ⚠️ Current ratio decreased from 0.16 (2024) to 0.15 (2025), indicating liquidity concerns.
• 🏭 The company sold 30-40 years old production machinery that was no longer viable.
• 🤝 A toll manufacturing agreement has been signed to maintain uninterrupted operations.
• 🌍 International economic recession and geopolitical tensions negatively impact sales.
• ⚡️ High electricity and gas tariffs create uncertainty.
• 🏢 Management entered into an agreement to rent out the factory building, generating additional income.
• 📉 Export sales decreased by more than 7% year-over-year.
• 📉 Local sales dropped significantly by 77% year-over-year.
• 💰 Other income of Rs. 9.347 million supported the bottom line.

🎯 Investment Thesis

HOLD. The company is navigating a difficult economic environment with declining sales but improving profitability. The strategic initiatives to rent out factory space and utilize toll manufacturing agreements are positive steps. The low current ratio and reliance on other income are concerning. The price target should be based on earnings growth potential, but the economic uncertainty makes that difficult without more information.