⚡ Flash Summary

Zahidjee Textile Mills Limited’s 2025 annual report reveals a positive financial performance. Sales increased by 7.6% to Rs. 40.6 billion, and after-tax profit surged to Rs. 1.49 billion from Rs. 635 million. The company did not declare a dividend, citing fund requirements for working capital. The board expressed confidence in the company’s strategic direction and future prospects despite challenges faced during the year. The outlook suggests continued monitoring of cost factors and commitment to being a progressive and profitable company.

📌 Key Takeaways

• 🚀 Sales increased by 7.6% to Rs. 40.6 billion in FY25 from Rs. 37.7 billion in FY24.
• 💰 After-tax profit soared to Rs. 1.49 billion in FY25 from Rs. 635 million in FY24.
• ❌ No dividend was declared for FY25.
• ⬆️ Gross profit margin increased to 6.6% of sales, compared to 5% in the previous year.
• 🌍 Exports grew by 5% to US$ 40.7 billion.
• 📈 Workers’ remittances significantly improved by 27% to US$ 38 billion.
• 📉 CPI Inflation decreased to 4.5% in FY25 compared to 23.4% in FY24.
• ✔️ Current ratio stood at 1.64 times.
• 👍 Long-term credit rating assigned ‘A’ and short-term ‘A1’ with ‘Stable’ outlook.
• 🏭 A new 16,800 spindles spinning unit completed and started commercial production on September 1, 2024.
• 🌱 Company is committed to environmental preservation.
• ⚖️ Gender pay gap reported at 19.25% with plans to enhance gender diversity.
• ⭐ Significant increase in revaluation surplus to 4,988,696,347.
• ✅ The Board has tasked the Board Audit Committee to oversee risk management.
• ❗ Challenges include a poor cotton crop, volatility in cotton prices and high financial costs.

🎯 Investment Thesis

Based on the reported financial performance and strategic initiatives, a BUY recommendation is warranted for Zahidjee Textile Mills. The company’s strong profitability, revenue growth, and effective cost management indicate promising future performance. A price target is set at Rs. 90 per share, reflecting a 15% premium on the current book value per share of Rs. 74.66. This target is supported by the company’s improved financials and positive industry outlook. The time horizon for realizing this price target is medium-term, approximately 18 months.