announcements

⚡ Flash Summary

Shahtaj Textile Limited’s corporate briefing reveals a challenging year. Net sales decreased by 16.8% to Rs 6.620 billion, which they attributed to focusing on sales orders against weaving charges. However, the company reported an after-tax profit of Rs 110.983 million, with EPS rising to Rs 11.49, compared to Rs 2.81 in the prior year, indicating improved profitability despite lower revenues. The company has also installed a 1 MW solar plant and is in the process of adding another 3.3 MW, showing a commitment to renewable energy and cost reduction.

📌 Key Takeaways

• 📉 Net sales decreased by 16.8% from Rs 7.953 billion to Rs 6.620 billion.
• ⬆️ After-tax profit increased to Rs 110.983 million.
• ⬆️ Earnings per share (EPS) increased significantly to Rs 11.49 from Rs 2.81.
• ☀️ Company installed a 1 MW solar plant.
• 🏭 Plans to add an additional 3.3 MW solar plant.
• ⬆️ Gross profit rate increased to 9.78% from 8.47%.
• 💰 Authorized Capital – 100,000,000.
• ✔️ Issued Paid-up Capital – 96,600,000 (Ordinary Shares of Rs. 10 each).
• ✔️ The entity ratings for the current year assigned on November 13, 2024 has been maintained at ‘A-/A-2′.
• ✔️ The governing board comprised of ten(10) members.
• ✔️ Director’s, CEO, Their Spouse and Minor Children SHARES HELD 3,673,940 PERCENTAGE % 38.03

🎯 Investment Thesis

Given the mixed performance, I recommend a HOLD rating on Shahtaj Textile Limited. The increased EPS and focus on renewable energy are encouraging, but the revenue decrease needs to be closely monitored. I would need to better understand what sales orders against weaving charges is. Current market value of 89.33, I think it can get to 100 but it would be a long time to get there. Given risk factor, would need it as HOLD.

⚡ Flash Summary

Shahtaj Textile Limited’s corporate briefing session presentation reveals a challenging year ended June 30, 2025. Net sales decreased by 16.8% to Rs 6.620 billion due to a shift in sales strategy towards orders where yarn is customer-supplied. Despite lower revenues, the company achieved a profit after tax of Rs 110.983 million, significantly higher than the previous year, resulting in an EPS of Rs 11.49, up from Rs 2.81. This enhanced profitability is attributed to reduced finance costs, minimum tax benefits, and an improved gross profit margin, which rose to 9.78% from 8.47%.

📌 Key Takeaways

• 📉 Revenue decreased by 16.8%, from Rs 7.953 billion to Rs 6.620 billion.
• ✅ Profit after tax increased to Rs 110.983 million compared to Rs 27.192 million last year.
• 🚀 Earnings per share (EPS) increased to Rs 11.49 from Rs 2.81.
• 📈 Gross profit margin improved to 9.78% from 8.47%.
• 💰 Cash dividend declared at Rs 5.50 per share.
• ⚡️ The company installed a 1 MW solar plant and is adding 3.3 MW more to reduce energy costs and carbon footprint.
• 🏭 Total installed looms are 179, supported by self-power generation.
• ✔️ Credit rating maintained at ‘A-/A-2’ by VIS Credit Rating Company Limited.
• 🏢 Authorized capital is Rs 100,000,000 with an issued paid-up capital of Rs 96,600,000.
• 🌍 Operations span from manufacturing in Lahore to marketing in Karachi.
• 📊 Breakup Value per Share is 245.33
• ✔️ The company’s focus is on manufacturing grey fabric for key exporters.
• 🤝 The company is a part of the Shahnawaz Group.
• 🗓️ The company was incorporated in January 1990.

🎯 Investment Thesis

HOLD. Shahtaj Textile’s improved profitability and EPS are encouraging, but the significant revenue decrease warrants caution. The strategic shift in sales needs to be monitored for sustained impact. The company’s cost management efforts and investment in renewable energy are positive signals. The current valuation appears attractive, but a more in-depth analysis is needed before considering a BUY rating. Continue to monitor the company’s financial performance over the next few quarters to assess the sustainability of these improvements.