⚡ Flash Summary

Shahtaj Textile Limited reported a decrease in net sales revenue for the quarter ended September 30, 2025, falling by 15.7% from Rs 1.968 billion to Rs 1.659 billion, primarily due to increased sales orders booked against processing charges. Despite the revenue decline, the company achieved an after-tax profit of Rs 57.313 million, a significant increase from Rs 1.08 million in the same period last year, resulting in an EPS of Rs 5.93 compared to Rs 1.08. The increase in profitability was attributed to a higher gross profit rate, which rose from 8.89% to 11.74% due to marketing efforts, efficient inventory procurement, cost control, and the generation of renewable energy.

📌 Key Takeaways

• 📉 Net Sales Revenue decreased by 15.7%, from Rs 1.968 billion to Rs 1.659 billion.
• ✅ After-tax profit surged to Rs 57.313 million, up from Rs 1.08 million YoY.
• 👍 Earnings Per Share (EPS) increased significantly to Rs 5.93 from Rs 1.08 YoY.
• 📈 Gross Profit (GP) rate improved from 8.89% to 11.74%.
• ⬇️ Distribution costs decreased due to reduced export sales.
• ⬆️ Administrative expenses increased due to inflation.
• 📉 Finance costs decreased due to prudent financial management and lower policy rates.
• ☀️ The company installed a 1 MW solar plant last year and plans to add 3.3 MW in the current financial year.
• ⚠️ Textile industry faces challenges including recent heavy rains and floods impacting crops.
• ⚠️ High tax rates and energy prices may impact future profit margins.
• 🤝 Government is expected to introduce business-friendly policies to support industrial growth.

🎯 Investment Thesis

Based on the provided information, a HOLD recommendation is appropriate. While the company has demonstrated a significant improvement in profitability and EPS, the revenue decline and external risks warrant caution. A price target cannot be accurately assessed without additional valuation data, such as sector-specific ratios. Further monitoring of revenue trends, cost management, and government policy changes is recommended. Current positive momentum is offset by external risks.