⚡ Flash Summary
Metropolitan Steel Corporation Limited (MSCL) reported a challenging financial year ending June 30, 2025. Sales revenue decreased by 18% to Rs. 100.747 million compared to Rs. 122.475 million in the previous year. The company experienced a gross loss of Rs. 11.683 million, a significant drop from the gross loss of Rs. 17.213 million in the prior year. Despite these challenges, the company maintains a debt-free balance sheet and is exploring strategies to enhance sales volume through negotiations with Chinese suppliers.
📌 Key Takeaways
- 📉 Sales revenue decreased by 18% to Rs. 100.747 million in FY25 from Rs. 122.475 million in FY24.
- 📉 Cost of sales decreased by 20% to Rs. 112.430 million.
- 📉 Gross loss was Rs. 11.683 million, compared to a loss of Rs. 17.213 million in the previous year.
- 🏭 Capacity utilization decreased to 5.98% (299 Tons) from 8.50% (425 Tons) in the previous year, a reduction of 2.52%.
- 💰 The company reported a net loss after tax of Rs. 12.423 million (FY24: Rs. 23.341 million).
- ✅ The authorized share capital is Rs. 500 million, and the issued, subscribed, and paid-up capital is Rs. 309.776 million.
- ⚖️ The company has no long-term or short-term loans from financial institutions.
- 🇨🇳 MSCL is negotiating with Chinese suppliers to accept 90-day DA LC terms to enhance working capital.
- 🌍 The company cites increased energy prices, slow economic activity, and downturn in China’s market as reasons for sales decline.
- 📊 Current Ratio decreased to 0.29 in 2025 from 0.39 in 2024.
- 💸 EPS was negative at -0.40 in 2025 compared to -0.75 in 2024.
- 🌱 The company anticipates reasonable growth due to decreased prices and Dollar Rupee parity.
🎯 Investment Thesis
Given the current financial performance and associated risks, a HOLD rating is recommended for MSCL. The declining sales, negative profitability, and operational inefficiencies raise concerns about the company’s ability to generate returns. While the company’s debt-free status is a positive factor, it is insufficient to warrant a BUY recommendation. A turnaround strategy and successful implementation of initiatives to boost sales volume are necessary before considering a more positive outlook. The price target is difficult to ascertain given current losses, but I would consider the current share price to be fair.
Disclaimer: AI-generated analysis. Not financial advice.