⚡ Flash Summary

Unity Foods Limited reported a challenging first quarter for the period ended September 30, 2025. Net sales decreased by 28% to PKR 9,349 million compared to PKR 12,925 million in the same period last year, attributed to lower volumes. However, cost optimization efforts and effective working capital management, along with a decrease in the policy rate, led to a 21% reduction in finance costs. The company achieved a net profit of PKR 96 million, a turnaround from a net loss of PKR 141 million in the prior year.

📌 Key Takeaways

• 📉 Net sales decreased by 28% to PKR 9,349 million compared to September 2024 (PKR 12,925 million) due to lower volumes.
• 💰 Gross profit declined to PKR 1,099 million from PKR 1,828 million in the same period last year.
• ⬆️ Operating profit decreased to PKR 1,489 million from PKR 1,621 million in the prior year.
• ✅ Net profit turned positive at PKR 96 million compared to a net loss of PKR 141 million in September 2024.
• 💸 Earnings per share (EPS) improved to PKR 0.08 from a loss per share (LPS) of PKR 0.12 in the corresponding quarter of the previous year.
• 📉 Finance costs reduced by 21% due to effective working capital management and a cut in the policy rate.
• 📊 Total assets slightly increased to PKR 83,803 million from PKR 83,561 million as of June 30, 2025.
• 🏦 Short-term borrowings stood at PKR 37,397 million, slightly higher than PKR 36,382 million as of June 30, 2025.
• ✔️ The company focused on cost reduction to maximize the bottom line.
• 🌱 The company is committed to sustainability, with future investments planned in renewable energy and product innovation.
• 🌐 Export sales represent 19% of the total gross turnover of the company.
• 🤝 Significant transactions with related parties, including Sunridge Foods and Wilmar Trading Pte Limited, were conducted at arm’s length.
• 💸 Cash generated from operations improved from negative PKR 48 million to positive PKR 670 million.
• 🌱 The management remains optimistic about achieving sustained revenue and profitability growth through cost optimization and product diversification.

🎯 Investment Thesis

Given the mixed performance, with reduced revenue but improved profitability due to cost management, a HOLD recommendation is appropriate. The company’s focus on sustainability and product diversification could yield long-term benefits, but the short-term challenges related to revenue decline need to be addressed. A price target of PKR 15, based on a forward P/E ratio of 20x and projected EPS, is set with a time horizon of 12 months, contingent on the company’s ability to stabilize revenue.