Shahmurad Sugar Mills Limited (SHSML) has unveiled outstanding financial results for the year ended September 30, 2025, marking a dramatic turnaround in profitability. The company reported an astonishing 1639% surge in net profit, primarily fueled by a massive reduction in finance costs and enhanced operational efficiency, despite a modest 8.82% dip in sales. This exceptional performance culminates in a generous total cash dividend of Rs. 20 per share (200%) for shareholders.
Financial Performance Highlights
While sales for the year saw a modest decrease of 8.82% to Rs. 23.47 billion (2024: Rs. 25.74 billion), SHSML showcased impressive cost management and pricing power. Gross profit surged by 13.58% to Rs. 2.48 billion, significantly expanding gross margins from 8.47% in 2024 to 10.56% in 2025. This indicates enhanced operational efficiency and potentially better realization prices for its products.
The most impactful improvement stemmed from a massive 57.12% reduction in finance costs, plummeting from Rs. 1.65 billion in 2024 to Rs. 707 million in 2025. This, combined with an extraordinary 94.62% decrease in levies (from Rs. 339 million to Rs. 18 million), propelled profit before tax from a modest Rs. 84 million to an impressive Rs. 1.50 billion – a staggering 1678.6% increase. Consequently, net profit for the year skyrocketed by 1639.2% to Rs. 911 million (2024: Rs. 52 million), translating to an Earnings Per Share (EPS) of Rs. 43.15, a dramatic leap from Rs. 2.48 in the prior year.
Robust Cash Flow and Liquidity
SHSML also reported a robust turnaround in cash flow from operating activities, shifting from a negative Rs. 1.38 billion in 2024 to a strong positive inflow of Rs. 2.73 billion in 2025. This powerful cash generation significantly bolstered the company's liquidity, with total cash and cash equivalents at year-end increasing by 66.7% to Rs. 5.91 billion (2024: Rs. 3.54 billion).
Strategic Management and Shareholder Returns
The Board's recommendation of a final cash dividend of Rs. 6.00 per share (60%), supplementing the Rs. 14.00 interim dividend (140%) already paid, brings the total payout to a substantial Rs. 20.00 per share (200%). This generous dividend underscores management's strong confidence in SHSML's sustained profitability and robust cash generation. The absence of bonus or right share proposals further highlights a preference for direct cash returns to shareholders.
Further demonstrating prudent financial management, the company achieved a 40.13% reduction in stock-in-trade (from Rs. 5.44 billion to Rs. 3.26 billion), freeing up capital and improving cash conversion cycles. Concurrently, short-term investments surged by 106.9% to Rs. 5.84 billion (2024: Rs. 2.82 billion), reflecting a robust liquidity position and effective deployment of surplus funds.
Investor Outlook
SHSML's latest financial results paint a compelling picture of a company that has successfully navigated operational headwinds and significantly de-risked its financial structure. The dramatic surge in net profit, coupled with robust operating cash flows and a substantial dividend payout, positions SHSML as an attractive prospect for investors seeking both growth and consistent income.
Prudent investors should closely monitor SHSML's ability to sustain its enhanced gross margins, maintain efficient debt management to keep finance costs optimized, and capitalize on evolving trends within the sugar sector. The company's strong liquidity provides a solid foundation for future stability and potential strategic initiatives, making SHSML a compelling stock to watch on the PSX.