Shahzad Textile Mills Limited (SZTM) reported earnings per share of PKR 8.79 for FY25, compared to loss per share of PKR 5.50 in FY24. Furthermore, in 1QFY26, the company reported earnings per share of PKR 3.67, compared to loss per share of PKR 1.60 in the same period last year (SPLY). The company reported growth in both revenue and gross profit for the year, primarily driven by stronger export sales from the socks unit and improved margins resulting from lower raw material prices and the imposition of duties on imported yarn.
A key strategic initiative underway is the installation of a 2MW solar power project, which will meet approximately 20% of the company’s total energy requirement. The project is expected to be completed by June 2026, and management estimates a payback period of 1.75 to 2 years. In the spinning segment, the company has an installed capacity of 41.7 million kg with 85% utilization.
The socks segment has a capacity of 2.3 million dozen, operating at approximately 74% utilization. Overall, the business mix consists of roughly 20% exports and 80% local sales, while the socks division remains fully export-oriented. Out of total sales of PKR 11.5 billion, the socks unit contributed PKR 1.3 billion in export revenue. Management expects socks exports to increase to PKR 2.0 billion in the coming year as demand continues to improve.
The company currently operates on the LESCO electricity grid, having discontinued gas based power generation around 1.5 years ago due to prohibitively high gas costs. The dip in profitability during 2023 was attributed to adverse market conditions, particularly the influx of imported yarn (EFS and duty-free yarn), which pressured local yarn prices. However, the recent imposition of duties has helped stabilize yarn prices. Local market margins remain demand driven, as the company caters to a defined customer base. To manage periods of oversupply and protect pricing, they temporarily reduces supply to maintain market stability.
Important Disclosures
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