⚡ Flash Summary

Reliance Cotton Spinning Mills Limited (RCML) released its annual report for the year ended June 30, 2025. The company experienced a 5.0% increase in sales, reaching Rs. 15.82 billion, but a decrease in gross profit margin to 12.21%. Profit after tax decreased to Rs. 708 million, and EPS fell to Rs. 66.43. The Board has recommended a final cash dividend of 60%.

📌 Key Takeaways

• Sales increased by 5.0% year-over-year, reaching Rs. 15.82 billion.
• Gross profit margin decreased to 12.21% from 14.84% in the previous year.
• Profit after tax decreased to Rs. 708 million from Rs. 1,315 million in the previous year.
• Earnings per share (EPS) decreased to Rs. 66.43 from Rs. 127.72 in the previous year.
• A final cash dividend of 60% has been recommended by the board.
• Net sales: 15,816,270 (Thousands Rupees)
• Profit from operations: 1,745,803 (Thousands Rupees)
• Profit after taxation: 707,612 (Thousands Rupees)
• Finance Cost: 642,461 (Thousands Rupees)
• Gross profit %: 12.21 %
• The company is considering a Scheme of Compromises, Arrangement and Reconstruction under Sections 279 to 283 read with Section 285 for Amalgamation/ Merger of Reliance Cotton Spinning Mills Limited (RCSML) and its members with and into Sapphire Fibres Limited subject to obtaining necessary shareholders, creditors and regulatory approvals and sanction of the Scheme by the Honorable High Court of Sindh at Karachi along with fulfilment of corporate, regulatory and legal formalities.
• The financial statements has been prepared in accordance with the accounting and reporting standards as applicable in Pakistan.

🎯 Investment Thesis

Given the current financials, I recommend a HOLD rating for RCML. The increased revenue is a positive, but the decreased profit margin and EPS raise concerns. The proposed merger with Sapphire Fibres Limited could introduce new opportunities or challenges that need more data to evaluate. A neutral stance is appropriate until more information becomes available.