⚡ Flash Summary

The Organic Meat Company Limited (TOMCL) held a corporate briefing session for FY25, revealing a mixed financial performance. While revenue increased significantly by 18.72% to PKR 14,006.07 million, profitability metrics declined. Gross profit decreased by 18.84% to PKR 1,281.54 million, and profit after tax fell by 13.59% to PKR 429.79 million. This divergence between revenue growth and profitability decline warrants further investigation into the factors impacting margins.

📌 Key Takeaways

• ⬆️ Revenue increased by 18.72% from PKR 11,797.75 million in FY24 to PKR 14,006.07 million in FY25.
• 📉 Gross Profit decreased by 18.84% from PKR 1,579.04 million in FY24 to PKR 1,281.54 million in FY25.
• 📉 Profit Before Tax decreased by 5.94% from PKR 644.52 million in FY24 to PKR 606.27 million in FY25.
• 📉 Profit For The Year decreased by 13.59% from PKR 497.37 million in FY24 to PKR 429.79 million in FY25.
• 📉 Earnings Per Share (EPS) decreased by 17.61% from PKR 3.35 in FY24 to PKR 2.76 in FY25.
• ⬇️ Real EPS (adjusted) decreased by 1.43% from PKR 2.80 in FY24 to PKR 2.76 in FY25.
• 📉 Finance Cost decreased by 33.57% from PKR 231.49 million in FY24 to PKR 153.77 million in FY25.
• ⬆️ Other Income increased significantly by 183.64% from PKR 87.02 million in FY24 to PKR 246.82 million in FY25.
• 🏭 The company’s operational facilities include a slaughter-house, processing facility, and fattening farm on 16.352 acres in Gadap, Karachi.
• 🌍 TOMCL has expanded its market reach, including recent additions like Tajikistan.
• ✅ VIS Credit Rating Company Limited upgraded TOMCL’s ratings to ‘A/A-1’ from ‘A-/A-2’.
• 🚧 Taxation has significantly increased from 1% on Turnover to 39% of Profit.
• 🥩 TOMCL secured USD 3.24 Million of Frozen Boneless Beef Export Orders from New CIS Market – Tajikistan
• 🇨🇳 TOMCL secured USD 7.5 Million Export Orders from China for Cooked Frozen Boneless Beef for FY 2025-2026
• 🇦🇪 TOMCL succesfully negotiated and entered into a new export contract of US$ 8.1 million with Gold Crest Trading FZE, UAE for the export of frozen boneless beef

🎯 Investment Thesis

Based on the information provided, a HOLD recommendation is warranted. While the revenue growth is encouraging, the decline in profitability raises concerns about TOMCL’s ability to manage costs and maintain margins. Further analysis is needed to understand the underlying causes of the profitability decline and assess the company’s long-term prospects. The current share price does not reflect the decline in profitability and hence price needs to adjust to factor in the same. I would recommend revisiting with revised financials, in 6 months.