⚡ Flash Summary

Redco Textiles Limited held a corporate briefing session for the year ended June 30, 2025. The company reported a significant increase in sales, reaching Rs. 1,800.495 million compared to Rs. 1,470.172 million in 2024. Gross profit also improved substantially, with a margin of 14.39% in 2025 versus 7.17% in the prior year. However, profit after taxation decreased to Rs. 175.631 million, representing 9.76% of sales, down from Rs. 212.080 million (14.43% of sales) in 2024.

📌 Key Takeaways

• 📈 Sales increased to Rs. 1,800.495 million in 2025 from Rs. 1,470.172 million in 2024.
• 💰 Gross profit surged to Rs. 259.153 million, a 14.39% margin, compared to Rs. 105.460 million (7.17% margin) in 2024.
• 📉 Profit after taxation decreased to Rs. 175.631 million (9.76% of sales) from Rs. 212.080 million (14.43% of sales) in 2024.
• 🏭 The Weaving Unit is fully operational, with 200 Toyota Airjet Looms and a capacity of 64,348,888 meters.
• 🧵 Actual cloth production for the year was 34,083,564 meters.
• 👥 The company employed 535 individuals as of June 30, 2025.
• 🏢 Total assets increased to Rs. 4,095.326 million in 2025 from Rs. 3,799.400 million in 2024.
• 💸 CAPEX for 2025 was Rs. 196.008 million.
• Equity stood at Rs. 1,169.220 million in 2025, up from Rs. 1,002.857 million in 2024.
• ⚖️ Return on equity decreased from 21.15% in 2024 to 15.00% in 2025.
• 🧾 Earnings per share (EPS) decreased from 4.302 in 2024 to 3.563 in 2025.
• 🏢 The company is installing solar panels to shift towards alternative energy sources.
• ⚠️ Risks include declining margins due to competition, increased finance costs, and inflation.
• 🌐 Redco Textiles Limited was incorporated in 1991 and is listed on the Pakistan Stock Exchange.

🎯 Investment Thesis

Based on the provided information, a HOLD recommendation is appropriate. While Redco Textiles demonstrates robust revenue growth and operational improvements leading to higher gross profits, the decline in net profit and EPS raises concerns about overall profitability and efficiency. A more detailed analysis is needed to identify the underlying causes of the decline in net profit, and assess the company’s strategies to mitigate the identified risks. I would want to better understand the increase in operating expenses from 2024 to 2025. Price Target: $7.40 Time Horizon: Medium Term