⚡ Flash Summary

Popular Islamic Modaraba (PIM) reported its financial performance for the year ended June 30, 2025. The company’s total income experienced a moderate decline, while net profit after tax saw a slight increase. Operating expenses were contained, reflecting management’s cost efficiency. The Modaraba converted a loan by issuing certificates to the Management company. Earning per certificate decreased from Re.1.76 to Re.1.39.

📌 Key Takeaways

• 📉 Total income decreased to Rs. 41.74 million from Rs. 45.69 million due to reduced Ijarah Financing.
• 💰 Operating expenses reduced to Rs. 8.88 million (FY 2024: Rs. 10.18 million) indicating cost control.
• 📉 Depreciation on Ijarah assets decreased to Rs. 4.55 million (FY 2024: Rs. 6.80 million).
• 📊 Operating profit remained stable at Rs. 28.31 million (FY 2024: Rs. 28.71 million).
• ⬆️ Other income increased to Rs. 2.46 million (FY 2024: Rs. 1.84 million).
• ✅ Net profit after tax increased to Rs. 25.71 million (FY 2024: Rs. 24.70 million).
• ✔️ Return on Equity is 11.72%.
• ✔️ Return on Assets is 10.80%.
• 🤝 The Modaraba converted loan through “other than right issue”.
• 📉 Earning per certificate decreased to Re.1.39 from Re.1.76.
• ⭐ Total Assets increased to 238.08 million from 232.65 million.
• 💹 Certificate Holders Equity increased to 219.34 million from 213.63 million.
• 🏢 PIM focuses on SMEs to support economy
• ⚠️ Enhanced tools of risk management are needed.

🎯 Investment Thesis

Based on the current financial performance, a HOLD recommendation is appropriate. While the company shows resilience, the decrease in earnings per certificate and moderate decline in total income necessitate a cautious approach. Further evaluation is needed to assess long-term growth prospects and sector-specific opportunities before considering a BUY or SELL decision.