⚡ Flash Summary

Escorts Investment Bank Limited (EIBL) reported a challenging financial year in FY25, with a notable decrease in revenue and a significant increase in net losses. The NBFC faced headwinds from ongoing inflationary pressures and regulatory complexities, despite aggressive monetary easing by the State Bank of Pakistan. While proactive risk management and compliance discipline strengthened the balance sheet, they temporarily widened losses. A majority shareholding acquisition is expected, with the company awaiting approval from the Securities and Exchange Commission of Pakistan (SECP).

📌 Key Takeaways

• 📉 Revenue declined to Rs. 108.38 million, down from Rs. 136.49 million YoY.
• ❗ Net loss widened significantly to Rs. 68.40 million from Rs. 23.10 million YoY.
• ⚠️ Loss per share increased to Rs. (0.50) from Rs. (0.17) YoY.
• 🏦 Operating expenses decreased slightly to Rs 164.286 million.
• 💰 Provisioning increased significantly to Rs. 9.70 million.
• ✅ Company continues to focus on strengthening microfinance operations.
• 👍 Cost control measures were successfully implemented.
• ✅ Company is regulated and supervised by SECP.
• 🤝 The Company’s IFS license is in the renewal process with the SECP.
• 📉 PACRA downgraded the Company’s long-term credit rating to “BBB-”
• 💼 AKD Securities is intending to acquire a majority stake in the company.
• 🗓️ AGM will be held on October 28, 2025, to approve the Annual Audited Financial Statements.
• 🚫 There will be no gifts will be distributed at the AGM

🎯 Investment Thesis

Given the significant losses, decreasing revenue, and non-compliance with equity requirements and a downgrade in long term credit rating, and potential regulatory compliance issues, a ‘SELL’ recommendation is warranted. There are material concerns about EIBL’s ability to achieve sustainable profitability. The intended equity acquisition is positive but not sufficient to offset current risks.