Systems Limited (SYS) announced the financial result for 1QCY25 whereby the company posted a profit after tax (PAT) of PKR 2,502mn (EPS: PKR 8.54) in contrast to PKR 1,571mn (EPS: 5.39) during 1QCY24, up by 59% The increase was primarily driven by higher technology services exports and improved gross margins.

§  Net sales in 1QCY25 clocked in at PKR 18,080mn, up by 19% YoY which is on account of 29.4%, 24.7%, and 6.2% YoY growth in telecommunications services,  technology-related solutions, and, Banking Financial Services & Insurance (BFSI), respectively.

§  Gross margins in 1QCY25 improved to 25.2%, compared to 23.7% in 1QCY24, driven by higher productivity, improved billing efficiency, and cost optimization initiatives during the quarter.

§  Administrative and Distribution expenses augmented by 27% YoY, which is due to inflationary pressure.

§  The company booked an expense of PKR 49mn in 1QCY25, dropping by 11% YoY.

§  Finance costs dropped by 40% YoY, settling at PKR 90mn during 1QCY25, primarily due to a decline in interest rates.

§  The company booked effective taxation at 7% in 1QCY25 vis-à-vis 11% in 1QCY24.

Recommendation

We maintain our Buy recommendation on Systems Limited, with a Dec’25 target price of PKR 661/share. The stock is currently trading at forward P/E multiples of 14.7x for CY25 and 13.0x for CY26.

Courtesy – AHL Research