Strength-6

⚡ Flash Summary

The Organic Meat Company Limited (TOMCL) held a corporate briefing session for FY25, revealing a mixed financial performance. While revenue increased significantly by 18.72% to PKR 14,006.07 million, profitability metrics declined. Gross profit decreased by 18.84% to PKR 1,281.54 million, and profit after tax fell by 13.59% to PKR 429.79 million. This divergence between revenue growth and profitability decline warrants further investigation into the factors impacting margins.

📌 Key Takeaways

• ⬆️ Revenue increased by 18.72% from PKR 11,797.75 million in FY24 to PKR 14,006.07 million in FY25.
• 📉 Gross Profit decreased by 18.84% from PKR 1,579.04 million in FY24 to PKR 1,281.54 million in FY25.
• 📉 Profit Before Tax decreased by 5.94% from PKR 644.52 million in FY24 to PKR 606.27 million in FY25.
• 📉 Profit For The Year decreased by 13.59% from PKR 497.37 million in FY24 to PKR 429.79 million in FY25.
• 📉 Earnings Per Share (EPS) decreased by 17.61% from PKR 3.35 in FY24 to PKR 2.76 in FY25.
• ⬇️ Real EPS (adjusted) decreased by 1.43% from PKR 2.80 in FY24 to PKR 2.76 in FY25.
• 📉 Finance Cost decreased by 33.57% from PKR 231.49 million in FY24 to PKR 153.77 million in FY25.
• ⬆️ Other Income increased significantly by 183.64% from PKR 87.02 million in FY24 to PKR 246.82 million in FY25.
• 🏭 The company’s operational facilities include a slaughter-house, processing facility, and fattening farm on 16.352 acres in Gadap, Karachi.
• 🌍 TOMCL has expanded its market reach, including recent additions like Tajikistan.
• ✅ VIS Credit Rating Company Limited upgraded TOMCL’s ratings to ‘A/A-1’ from ‘A-/A-2’.
• 🚧 Taxation has significantly increased from 1% on Turnover to 39% of Profit.
• 🥩 TOMCL secured USD 3.24 Million of Frozen Boneless Beef Export Orders from New CIS Market – Tajikistan
• 🇨🇳 TOMCL secured USD 7.5 Million Export Orders from China for Cooked Frozen Boneless Beef for FY 2025-2026
• 🇦🇪 TOMCL succesfully negotiated and entered into a new export contract of US$ 8.1 million with Gold Crest Trading FZE, UAE for the export of frozen boneless beef

🎯 Investment Thesis

Based on the information provided, a HOLD recommendation is warranted. While the revenue growth is encouraging, the decline in profitability raises concerns about TOMCL’s ability to manage costs and maintain margins. Further analysis is needed to understand the underlying causes of the profitability decline and assess the company’s long-term prospects. The current share price does not reflect the decline in profitability and hence price needs to adjust to factor in the same. I would recommend revisiting with revised financials, in 6 months.

⚡ Flash Summary

The Organic Meat Company Limited (TOMCL) held a corporate briefing session for FY25, highlighting an increase in Net Sales but a decrease in Gross Profit and Earnings Per Share. While revenue grew by 18.72%, profitability metrics declined, indicating potential challenges in cost management or increased operating expenses. The company emphasized its market reach and recent achievements, including securing export orders. Investors should closely monitor the company’s strategies to improve profitability and manage operational costs effectively.

📌 Key Takeaways

• 📈 Net Sales increased by 18.72% from PKR 11,797.75 million in FY24 to PKR 14,006.07 million in FY25.
• 📉 Gross Profit decreased by 18.84% from PKR 1,579.04 million in FY24 to PKR 1,281.54 million in FY25.
• 📉 Operating Expenses slightly decreased by 2.75% from PKR 790.05 million to PKR 768.32 million.
• 📉 Finance Cost decreased significantly by 33.57% from PKR 231.49 million to PKR 153.77 million.
• ⬆️ Other Income increased substantially by 183.64% from PKR 87.02 million to PKR 246.82 million.
• 📉 Profit Before Tax decreased by 5.94% from PKR 644.52 million to PKR 606.27 million.
• 📉 Profit For The Year decreased by 13.59% from PKR 497.37 million to PKR 429.79 million.
• 📉 Earnings Per Share (EPS) decreased by 17.61% from PKR 3.35 to PKR 2.76.
• ➡️ Real EPS (after adjustments) decreased slightly by 1.43% from PKR 2.80 to PKR 2.76.
• 🌐 TOMCL has expanded its market reach to include Tajikistan and has extensive market access within Pakistan’s meat export segment.
• ✅ The company has achieved several ‘firsts’ in Pakistan, including deboning facilities and exporting cooked/heat-treated meat to China.
• 🤝 TOMCL secured a USD 3.24 million Frozen Boneless Beef Export Order from the CIS Market – Tajikistan.
• 💰 The company secured USD 7.5 million in export orders from China for cooked frozen boneless beef for FY25-26.
• 🏭 TOMCL has commenced operations at its Karachi Export Processing Zone (KEPZA) facility on October 1, 2025.
• ⚠️ Taxation has increased from 1% on Turnover to 39% of Profit.

🎯 Investment Thesis

A ‘Hold’ recommendation is maintained for TOMCL. The company’s revenue growth is promising, but declining profitability metrics raise concerns. Before considering a ‘Buy’ rating, investors should wait for TOMCL to demonstrate effective cost management and a clear path to improved profitability. A price target cannot be reasonably established without further clarity on future earnings potential.