⚡ Flash Summary

Shadman Cotton Mills Ltd. reported a challenging year for the year ended June 30, 2025, marked by a significant decline in net turnover. Revenue decreased from PKR 731.31 million in 2024 to PKR 509.96 million in 2025. The company experienced a gross loss of PKR 19.67 million compared to a gross profit of PKR 4.93 million in the prior year. This resulted in a loss after taxation of PKR 16.57 million, a substantial decrease from a loss of PKR 108.70 million in the previous year.

📌 Key Takeaways

• 📉 Net turnover decreased significantly to PKR 509.96 million in 2025 from PKR 731.31 million in 2024.
• 😔 The company reported a gross loss of PKR 19.67 million in 2025, compared to a gross profit of PKR 4.93 million in 2024.
• ❗️ Operating profit increased to PKR 13.92 million in 2025 from PKR 6.19 million in 2024.
• 💸 Loss before levies and taxation increased to PKR 28.93 million in 2025 from PKR 12.82 million in 2024.
• 📉 Loss after taxation was PKR 16.57 million in 2025, compared to PKR 108.70 million in 2024.
• 🌍 Geographical sales show a significant decrease in sales to the United Kingdom from PKR 62.62 million to PKR 54.16 million.
• 🇪🇸 Sales to Spain decreased from PKR 173.16 million to zero.
• 🇵🇱 Sales to Poland decreased from PKR 212.20 million to zero.
• 🇵🇰 Local sales increased from PKR 188.40 million to PKR 316.51 million.
• 📊 Export sales decreased from PKR 542.91 million to PKR 193.45 million.
• ⚠️ Three major customers account for more than 10% of total sales.
• ❗️The company operates as a single segment.
• 🇵🇰 All non-current assets and sales are originated from Pakistan.

🎯 Investment Thesis

Given the significant decrease in revenue and the shift to a gross loss, a SELL recommendation is warranted for Shadman Cotton Mills. The company’s financial performance indicates potential struggles in maintaining profitability and market share. The lack of diversification in customer base adds to the risk profile. Due to these issues, a significant return is very unlikely.