⚡ Flash Summary
Suraj Cotton Mills Limited (SCML) reported its FY 2025 results, showing a mixed performance. While fabric sales increased slightly, yarn sales experienced a significant decline. Overall profitability metrics such as gross profit ratio and net profit margin saw slight improvements compared to the previous year. Investors should closely monitor yarn sales trends and any potential impacts from increasing energy costs and raw material supply challenges.
📌 Key Takeaways
- 🏭 Suraj Cotton Mills operates in spinning and weaving, producing cotton yarn and woven fabrics.
- 🌍 Products are sold both locally and internationally, mainly to Asia and Europe.
- 📉 Yarn production decreased by 10.11% from 434,800 bags in FY23-24 to 390,830 bags in FY24-25.
- 📈 Fabric production increased by 4.94% from 42,619,000 meters to 44,725,000 meters.
- 📉 Yarn sales decreased by 14.14% from 438,180 bags to 376,230 bags.
- 📈 Fabric sales increased by 4.10% from 42,694,000 meters to 44,445,000 meters.
- 📈 Gross profit ratio slightly increased from 8.1% to 8.3%.
- 📈 Operating profit margin slightly increased from 8.0% to 8.0%.
- 📈 Net profit margin increased from 3.4% to 4.1%.
- 🔻 Debt to equity ratio improved from 25:75 to 21:79.
- 📈 Current ratio increased from 2.6 to 2.7.
- 💰 Sales decreased from PKR 29,744.29 million to PKR 27,411.46 million.
- 💰 Net Income increased from PKR 1,006.42 million to PKR 1,118.68 million.
- ⚠️ The company faces risks from high energy costs and unreliable cotton supply.
🎯 Investment Thesis
Hold. The company’s mixed performance, with declining yarn sales offset by increasing fabric sales, presents uncertainty. While profitability metrics show slight improvement and the balance sheet appears stronger, negative operating cash flow is a concern. Therefore, a hold rating is appropriate until trends become clearer and the impact of risks is better understood.
Disclaimer: AI-generated analysis. Not financial advice.