Shahtaj Sugar Mills Limited (SHJS) has announced a significant financial turnaround for the year ended September 30, 2025. Despite a marginal dip in revenue, the company remarkably shifted from a pre-tax loss to a substantial profit and generated robust operating cash flows. This strong performance has led the Board of Directors to recommend a cash dividend of Rs. 1.25 per share (12.5%), signaling renewed investor confidence.
Financial Highlights: A Shift Towards Profitability
Revenue from contracts with customers experienced a marginal decrease of nearly 2%, settling at Rs. 8.65 billion for FY2025, down from Rs. 8.82 billion in the previous year. Concurrently, gross profit saw a 7.3% decline, leading to a slight compression in the gross profit margin from 10.51% to 9.94%.
However, the most impactful change was a dramatic reduction in finance costs, which plummeted by over 42% from Rs. 645 million in FY2024 to Rs. 374 million in FY2025. This substantial saving was the primary catalyst, transforming a loss before income tax and levy of Rs. 64 million last year into a profit of Rs. 139 million this year – a remarkable swing of over Rs. 200 million.
Consequently, the net profit for the year registered a modest 1.7% increase to Rs. 32.7 million, up from Rs. 32.1 million. This translated into an Earnings Per Share (EPS) of Rs. 2.72, a slight improvement over Rs. 2.68 in the prior year.
Operational cash flow demonstrated a remarkable rebound, swinging from a deficit of Rs. 639 million in FY2024 to a strong positive generation of Rs. 649 million in FY2025. This represents a massive positive swing of nearly Rs. 1.3 billion, indicating significantly healthier core business operations and improved working capital management.
On the balance sheet, SHJS continued strategic investments in its infrastructure, with property, plant, and equipment increasing by approximately Rs. 675 million. Simultaneously, the company successfully reduced its short-term borrowings by about Rs. 448 million, contributing to a more stable and robust financial structure.
Key Drivers of the Turnaround
The primary driver behind SHJS's improved profitability was the significant reduction in finance costs. This was largely a result of proactive debt management strategies, including a notable reduction in short-term borrowings and an increase in long-term financing, enhancing financial stability.
- Reduced inventory levels, with stock-in-trade decreasing from approximately Rs. 1.59 billion to Rs. 926 million, suggesting more efficient stock management and potentially quicker sales cycles.
- A decrease in levies from Rs. 114 million to Rs. 77 million also provided a positive impact on the company's bottom line.
Strategic Outlook and Shareholder Value
The continued capital expenditure, with approximately Rs. 709 million invested in property, plant, and equipment, signals ongoing modernization or expansion efforts, suggesting a long-term growth perspective and commitment to enhancing operational capabilities.
The strategic shift in the company's debt profile, marked by a substantial reduction in short-term borrowings and an increase in long-term financing, indicates management's clear focus on enhancing financial stability and mitigating exposure to short-term interest rate volatility.
The Board's recommendation of a cash dividend of Rs. 1.25 per share (12.5%) strongly underscores their confidence in the company's improved financial health and its commitment to rewarding shareholders, providing a tangible return on investment.
Investor Takeaway: A Promising Turnaround Story
Investors should view these results as a robust positive signal. The impressive turnaround in profit before tax, coupled with the strong generation of operating cash flow, clearly demonstrates a healthier underlying business. The recommended dividend further solidifies this positive outlook, offering immediate shareholder value.
Key areas for investors to monitor going forward include the sustainability of lower finance costs, the company's ability to drive revenue growth in a competitive sugar market, and continued efficiency in inventory and operational management. The ongoing capital expenditure suggests future growth ambitions, which will be crucial to track for long-term value creation.
Overall, Shahtaj Sugar Mills appears to be on a path of financial stabilization and improved operational efficiency, positioning it as an interesting prospect for investors seeking a compelling turnaround story complemented by a dividend yield.