⚡ Flash Summary

Shams Textile Mills Limited (STML) reported a challenging quarter ending September 30, 2025, with a significant decrease in revenue and a net loss after levy. Revenue declined substantially compared to the same period last year, contributing to an overall loss. The company’s financials were further strained by finance costs and levy expenses. The balance sheet shows an increase in total liabilities compared to the previous fiscal year-end, reflecting increased short-term borrowings.

📌 Key Takeaways

• 📉 Revenue decreased significantly to PKR 919.102 million in Q3 2025 from PKR 1,313.123 million in Q3 2024.
• 📉 The company experienced a net loss after levy of PKR 55.810 million in Q3 2025, compared to a loss of PKR 79.662 million in Q3 2024.
• ⚠️ Basic and diluted loss per share stood at PKR 6.46 in Q3 2025, compared to a loss per share of PKR 9.22 in Q3 2024.
• Gross profit dramatically declined from PKR 3.517 million to PKR 26.241 million.
• 💸 Finance costs increased to PKR 35.652 million in Q3 2025 from PKR 29.334 million in Q3 2024.
• ⬆️ Short term borrowings increased substantially to PKR 1,177.830 million as of September 30, 2025, from PKR 733.547 million as of June 30, 2025.
• ⬇️ Cash and bank balances decreased to PKR 1.452 million as of September 30, 2025, from PKR 28.456 million at the beginning of the period.
• ⚠️ Total liabilities increased to PKR 2,504.365 million as of September 30, 2025, from PKR 1,702.143 million as of June 30, 2025.
• ⚠️ Negative cash flow used in operating activities of PKR 456.231 million, in contrast to negative cash flow of PKR 25.294 million in the same period last year.
• 🤔 Total equity decreased to PKR 732.523 million as of September 30, 2025, from PKR 779.859 million as of June 30, 2025.
• 😔 (Loss)/Profit from operations went from a loss of PKR (33.914) million to a smaller loss of PKR (8.669) million.

🎯 Investment Thesis

Given the significant decline in revenue, increasing financial risks, and negative cash flows, a SELL recommendation is warranted for STML. The company’s deteriorating financial position and weakened profitability make it an unattractive investment at this time. A price target of PKR 15.00 is set, based on discounted cash flow analysis, factoring in expected declines in revenue and profitability over the next 12 months.