Gadoon Textile Mills Limited (GADT) reported a net profit of PKR 2.00 billion (EPS: PKR 71.45) in 9MFY25, significantly higher than PKR 278 million (EPS: PKR 9.91) recorded in 9MFY24. The company sustained margins during the period by effectively controlling costs, optimizing operations, and revising its selling and pricing strategies. Notably, GADT replaced old machinery with state-of-the-art equipment, leading to improved operational efficiency. To manage energy costs, the company installed 16.94 MW of solar power capacity, with an additional 10.80 MW under development.
The current electricity cost stands at PKR 35–37/KWh, with the company targeting a reduction to PKR 30 or lower. As of 9MFY25, renewable energy contributed 13% of total energy consumption, against a total plant demand of 42 MW. GADT also made strategic investments in dairy infrastructure.
However, growth in this segment has been constrained by the imposition of taxes on corporate dairy products. To enhance market share, the company is focusing on value-added textile products. Finance costs declined by 38% YoY to PKR 1.91 billion in 9MFY25 compared to PKR 3.07 billion in the same period last year. Long-term financing reduced to PKR 3.58 billion as of March 31, 2025.
Management expects the application of EFS to be beneficial for the company. The company is operating at full capacity and is prioritizing reinvestment for growth over shareholder payouts. As such, no dividend was announced, and management confirmed there are no ongoing discussions regarding a stock split. The company has made substantial capital expenditures, primarily for equipment upgrades. GADT’s cotton procurement consists of a 75:25 mix of local and imported cotton, at an average price of PKR 18,000 per maund, with an annual requirement of 60,000 maunds. The company expects to remain under the minimum tax regime, paying 1.25% of turnover.
In response to U.S. tariffs, management is working to diversify its export markets and sees competitive advantage in its localized yarn supply. Looking ahead, GADT aims to improve margins in 4QFY25, although management acknowledges challenges remain. The focus remains on further reducing energy costs, with targets expected to be achieved by the end of next year. The topline is projected to reach PKR 75–80 billion in FY26, driven by ongoing strategic initiatives.
Important Disclosures
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