SELL

⚡ Flash Summary

Escorts Investment Bank Limited (ESBL) reported a net loss of PKR 26.97 million for the quarter ended September 30, 2025, compared to a net loss of PKR 9.37 million for the same period last year. This represents a significant deterioration in profitability. The loss is primarily attributed to a decrease in income from financing and investments, coupled with increased administrative expenses. The company’s total assets decreased slightly from PKR 660.80 million to PKR 637.44 million.

📌 Key Takeaways

• 📉 Net loss significantly widened to PKR 26.97 million from PKR 9.37 million YoY.
• 💰 Total income decreased substantially from PKR 30.77 million to PKR 16.38 million YoY.
• 📊 Loss per share increased to PKR (0.20) from PKR (0.17) YoY.
• 🏢 Administrative expenses increased from PKR 37.45 million to PKR 39.69 million YoY.
• 💸 Finance costs decreased from PKR 1.56 million to PKR 0.91 million YoY.
• Investments performed poorly with short term finances decreasing from PKR 100.06 million to PKR 59.21 million.
• 📉 Operating loss before provisions and taxation deepened to PKR (24.22) million from PKR (8.24) million YoY.
• Balance sheet shows decreased Cash and bank balances from PKR 314.95 million to PKR 306.95 million.
• 📉 Total assets declined slightly from PKR 660.80 million to PKR 637.44 million.
• Liabilities decreased from PKR 130.99 million to PKR 136.85 million.
• Equity dropped from PKR 502.58 million to PKR 475.61 million.
• ⚠️ Revenue reserve further dipped to negative PKR 1,054.32 million from negative PKR 1,027.55 million.
• 👎 Revaluation surplus on property and equipment decreased marginally to PKR 15.89 million from PKR 16.09 million

🎯 Investment Thesis

SELL. ESBL’s financial performance is deteriorating, with widening losses and declining revenue. The company faces significant financial and operational risks. The current market conditions make it difficult for ESBL to improve its profitability in the near term. The price target is set at PKR 8.00, reflecting a discount to book value, over a time horizon of 6-12 months.

⚡ Flash Summary

Escorts Investment Bank Limited reported a challenging quarter ending September 30, 2025. The bank experienced a significant decline in total income, falling to Rs. 16.38 million from Rs. 30.77 million in the same period last year, a decrease of 46.7%. This decline is primarily attributed to lower returns on financing and investment activities. Consequently, the bank incurred a net loss after tax of Rs. 26.97 million, a substantial increase from the Rs. 9.37 million loss in the prior year.

📌 Key Takeaways

• 📉 Total income decreased significantly by 46.7%, from Rs. 30.77 million to Rs. 16.38 million.
• ⬆️ Operating expenses increased slightly by 4.1%, from Rs. 39.01 million to Rs. 40.60 million.
• ❗️ Loss before tax surged by 195%, increasing from Rs. 9.05 million to Rs. 26.79 million.
• ❗️ Net loss after tax rose sharply by 188%, from Rs. 9.37 million to Rs. 26.97 million.
• ❗️ Loss per share increased by 17.6%, from Rs. (0.17) to Rs. (0.20).
• 💰 Administrative expenses increased to Rs. 39.69 million, a 6% rise compared to Rs. 37.45 million in Sep 2024.
• 📉 Cost-to-income ratio worsened due to reduced income and sustained expenses.
• 🏢 Management plans to close two non-performing branches.
• Staff payroll reduced to Rs. 5.8M from Rs. 7.6M, starting September 25, 2025.
• 💻 Emphasis on cost optimization, digital transformation, and diversification of income sources continues.
• 🏦 The bank is actively negotiating annual fees and subscriptions to reduce costs.
• 🌱 Focus remains on improving operational efficiency and exploring fee-based revenue channels.
• 💪 Strategic measures are being reviewed to enhance capital adequacy and shareholder value.
• 🏦 Acknowledgment of the Board’s appreciation to shareholders, clients, employees, and regulatory authorities.

🎯 Investment Thesis

Based on the reported results, a SELL recommendation is warranted. The significant decline in income, increased losses, and operational challenges indicate a deteriorating financial position. While management is taking steps to address these issues, the near-term outlook remains uncertain. A turnaround will take time and is dependent on successful implementation of strategic measures.