⚡ Flash Summary

Nishat Mills Limited’s (NML) annual report transmission reveals a robust financial performance for the year ended June 30, 2025. Revenue increased to Rs 178.167 billion, representing an 11.18% growth compared to the previous year. This growth, driven primarily by a 29.71% surge in local sales, showcases the effectiveness of enhanced marketing and product diversification. The company’s profit after taxation, however, experienced a marginal decline due to reduced other income. Despite the challenging operating environment, the company’s resilience is evident through disciplined cost management and strategic investments.

📌 Key Takeaways

• 📈 NML’s revenue reached Rs 178.167 billion, up 11.18% from the previous year.
• 🏠 Local sales grew by 29.71%, driving overall revenue increase.
• 💲 Export sales also increased, reflecting improved international market penetration.
• 💯 Gross profit increased by 15.60% to Rs 20.025 billion.
• ✅ Gross profit margin improved by 43 basis points to 11.24%.
• 🔻 EBITDA decreased slightly due to higher material and freight costs, landing at Rs 23.768 billion.
• 📉 Finance costs decreased by 19.25% to Rs 8.432 billion due to improved financial management and policy rate drops.
• 📉 Profit after taxation decreased slightly, landing at Rs 6.014 billion.
• ⬇️ Consolidated EPS stood at Rs 18.16 per share, compared to Rs 19.75 per share during the corresponding last year.
• ✅ Gearing ratio improved from 39.94% to 38.08%, indicating a stronger capital structure.
• 📊 Current ratio improved from 1.21 to 1.24, reflecting stronger working capital management.
• 💰 The board recommended 20% cash dividend (Rs 2 per share), against 30% last year.
• 📌 The company faces challenges with elevated local raw cotton prices and U.S. tariffs in 2025.
• 🔄 The company is focusing on product diversification and green energy transition.

🎯 Investment Thesis

I recommend a HOLD rating for NML. The company’s strong revenue growth signals positive momentum, but profitability pressures and external risks warrant caution. While NML demonstrates resilience, a comprehensive valuation analysis is required to determine a justifiable price target. Key factors to monitor include operational efficiencies, effective risk management, and the success of product diversification initiatives.