⚡ Flash Summary
Shahzad Textile Mills Limited reported a positive turnaround in its financial performance for the year ended June 30, 2025. Despite challenging macroeconomic conditions in Pakistan’s textile sector, the company achieved a 3.24% increase in revenue, reaching Rs. 11.371 billion. This growth, coupled with effective cost management and improved operational efficiencies, enabled the company to post a profit of Rs. 158.025 million, a significant recovery from the previous year’s loss. The company’s strategic focus on value-added segments, export diversification, and sustainability practices positions it for continued growth and resilience.
📌 Key Takeaways
- ✅ Revenue increased by 3.24% to Rs. 11.371 billion, showcasing growth in a tough market.
- ✨ The company returned to profitability with a net profit of Rs. 158.025 million, a substantial turnaround.
- 🚀 Export sales from the socks division surged by 33.57% to Rs. 1.435 billion, indicating strong export performance.
- 📉 No exports from the spinning unit (compared to prior year Rs 29.281 million) due to reduced global competitiveness.
- 🌱 A new Employees’ Provident Fund Scheme was established, enhancing employee benefits.
- 💡 The Company plans to install a Solar Energy System with a payback period of 1.75 years to reduce energy costs.
- 📚 Earnings per share (EPS) significantly improved to Rs. 8.79 from a loss per share of Rs. (5.50).
- 🚫 No dividend was declared due to capital expenditure requirements.
- 🌐 ISO certifications (ISO 9001:2015 and ISO 45001:2018) were maintained, reinforcing product quality.
- ⚠️ Exposure to foreign exchange, liquidity, and credit risks are actively managed.
- 🤝 Emphasis on fostering partnerships with suppliers, customers, and stakeholders.
- 🎯 Aims to increase female representation in the workforce to 2% within three years.
- 🏢 Plans to dispose of assets (Office in Tricon Corporate Centre) for minimum consideration of Rs 170 million towards capital investment
- 🔋 Plans towards capital investment in the installation of a Solar Energy System at the Company’s mills site
🎯 Investment Thesis
Given the company’s recent turnaround, improved EPS, and focus on sustainable practices, a BUY rating is warranted. Key initiatives, such as the Employees’ Provident Fund Scheme and planned Solar Energy System installation, demonstrate management’s commitment to long-term value creation. The proposed asset disposal and shift towards value-added segments provide further upside potential. The financial risk are being actively managed which should give more comfort to potential investors.
Disclaimer: AI-generated analysis. Not financial advice.