GUTM

⚡ Flash Summary

Gulistan Textile Mills Limited reported a significant loss for the quarter ended September 30, 2025, with a net loss after taxation of PKR 13.652 million compared to a loss of PKR 2.891 million in the same quarter last year. The company’s loss from operations also widened considerably, reaching PKR 13.627 million compared to PKR 2.890 million year-over-year. No dividends, bonus shares, or right shares were recommended. The accumulated losses have further increased on the balance sheet, contributing to a substantial negative total equity position.

📌 Key Takeaways

• ❌ Net loss after taxation widened to PKR 13.652 million in Q1 2025 from PKR 2.891 million in Q1 2024.
• 📉 Loss from operations significantly increased to PKR 13.627 million from PKR 2.890 million year-over-year.
• 🚫 No cash dividend, bonus shares, or right shares were declared for the quarter.
• 💸 Administrative expenses increased from PKR 1.550 million to PKR 2.541 million.
• ⚠️ Other expenses surged to PKR 11.085 million from PKR 1.340 million.
• 📊 Basic and diluted loss per share increased to PKR 0.72 from PKR 0.15.
• 💰 Finance costs increased to PKR 25,137 from PKR 1,125.
• 📉 Accumulated losses have increased to PKR 9,640.604 million as of September 30, 2025.
• 📉 Total equity is significantly negative at PKR (8,420.620) million.
• 🏦 Significant liabilities, including PKR 5,640.188 million payable to banking companies.
• 💸 Trade and other payables are substantial at PKR 248.147 million.
• 💵 Cash and bank balances stood at PKR 26.034 million.
• 📉 Negative cash flow from operations of PKR (14.262) million for Q1 2025.
• 📉 Negative retained earnings impacting the overall financials

🎯 Investment Thesis

Given the substantial losses, negative equity, and negative cash flow from operations, a SELL recommendation is warranted. The company’s financial position is precarious, with limited prospects for improvement in the near term. There is no specified price target. Significant restructuring, cost-cutting measures, or capital injection would be needed to improve outlook, but there is no plan as of the time of this report. A SHORT_TERM time horizon is appropriate for this recommendation.

⚡ Flash Summary

Gulistan Textile Mills Limited’s annual report for the year ended June 30, 2025, reveals a company grappling with significant financial distress. The company reports a substantial loss of Rs.(51,667,958) compared to a profit of Rs. 735,259,823 in the previous year. This drastic shift is attributed to ongoing financial constraints and the blocking of working capital facilities by lending institutions. The company is operating under a Scheme of Arrangement sanctioned by the Sindh High Court to restructure and settle debts, with a focus on selling assets to meet obligations.

📌 Key Takeaways

• 📉 Gulistan Textile Mills reports a net loss of Rs. (51.67) million in 2025, a sharp decline from a profit of Rs. 735.26 million in 2024.
• ⚠️ The company is operating under a Scheme of Arrangement to restructure debts, sanctioned by the Sindh High Court.
• 🔒 Working capital facilities remain blocked by lending financial institutions, hampering operations.
• 🏭 All three spinning units were sold by the asset sale committee in the last year.
• 🏛️ Significant litigations with banks persist, although the Scheme of Arrangement aims for their withdrawal.
• 🚫 The Board of Directors does not recommend a dividend for the year ended June 30, 2025.
• 💼 There is a deferred liability for gratuity of Rs. 80.49 million as of June 30, 2025.
• 📉 Loss per share is reported at Rs. (2.72) compared to earnings per share of Rs. 38.73 in the previous year.
• 🏦 Major bank accounts remain blocked due to ongoing litigations.
• ⚖️ The company is involved in multiple legal battles related to the levy of infrastructure cess and income tax.
• 📉 The company carries accumulated losses of Rs. (9,626.95) million as of June 30, 2025.
• 🏦 Payable to banking companies under the scheme of arrangement stands at Rs. 8,216.83 million.
• 🔍 Auditors have expressed a qualified opinion due to the inability to verify bank balances and balances payable regarding post-employment benefits.
• ❗ The company has adopted a non-going concern basis of accounting, reflecting doubts about its ability to continue as a going concern.

🎯 Investment Thesis

Given the financial distress, qualified audit opinion, non-going concern basis, legal uncertainties, high debt, and blocked operations, a ‘SELL’ recommendation is warranted. There is significant uncertainty about the company’s future viability and ability to generate positive returns. There is a price target of zero, with a short-term time horizon.

⚡ Flash Summary

Gulistan Textile Mills reported a significant loss after taxation of PKR 51.67 million for the year ended June 30, 2025, a stark contrast to the profit of PKR 735.26 million in the previous year. This translates to a negative earnings per share (EPS) of PKR 2.72 compared to a positive EPS of PKR 38.73 in 2024. The company experienced a considerable loss from operations of PKR 56.68 million. While other income partially offset the losses, it wasn’t sufficient to achieve profitability. The company’s scheme of arrangement with creditors sanctioned by the Sindh High Court Karachi is under implementation.

📌 Key Takeaways

• 📉 Loss after taxation: PKR 51.67 million in 2025 vs. Profit of PKR 735.26 million in 2024.
• 📉 EPS: Negative PKR 2.72 in 2025 vs. Positive PKR 38.73 in 2024.
• ⚠️ Loss from operations: PKR 56.68 million in 2025 compared to PKR 16.39 million in 2024.
• ⬆️ Other income: Decreased significantly to PKR 5.03 million in 2025 from PKR 751.66 million in 2024.
• 💰 Finance Cost: Remained relatively stable at PKR 18,901 in 2025 compared to PKR 14,783 in 2024.
• ⚖️ (Loss)/Profit before Taxation: PKR (51,667,958) in 2025 vs. PKR 735,259,923 in 2024.
• 🚫 No Cash Dividend, Bonus Shares, or Right Shares were declared for the year.
• 🏛️ Scheme of Arrangement: Implementation ongoing, sanctioned by Sindh High Court Karachi.
• 📅 AGM: Annual General Meeting scheduled for October 28, 2025.
• 📚 Share Transfer Books: To remain closed from October 21, 2025, to October 28, 2025.
• 🏦 Payable to Banking Companies under scheme of arrangement: PKR 8,216,834,000 for both 2025 and 2024.
• Assets decreased slightly from PKR 448.74 million in 2024 to PKR 441.41 million in 2025.

🎯 Investment Thesis

SELL. Gulistan Textile Mills’ financial performance has deteriorated significantly, with a substantial loss reported for the year ended June 30, 2025. The negative EPS and cash flow from operations, coupled with large accumulated losses and ongoing financial restructuring, make it a risky investment. A price target cannot be reasonably established given the negative earnings. The time horizon is indefinite.