AHL Research conducted a report on the financial performance of Systems Limited, which recorded a profit after tax (PAT) of PKR 2.7 billion (EPS: PKR 1.81) during 2QCY25. Result Highlights as Reported by AHL. 

• Systems Limited (SYS) announced its financial results for 2QCY25, posting a PAT of PKR 2,651 million (EPS: PKR 1.81) compared to PKR 1,672 million (EPS: PKR 1.15) during 2QCY24, reflecting a 59% increase. This growth was primarily driven by higher technology services exports and improved gross margins. Consequently, the cumulative earnings for 1HCY25 reached PKR 5,152 million (EPS: PKR 3.52).
• Net sales amounted to PKR 36,739 million during 1HCY25, marking an 18% year-on-year (YoY) increase. Sales for 2QCY25 also grew by 18% YoY to PKR 18.6 billion. Segment-wise, Telecommunications Services led with a 32% YoY increase, followed by Banking, Financial Services & Insurance (BFSI) at 21% YoY, and Technology Solutions at 8% YoY. The BFSI and Telecommunications segments continued to be the fastest growing, while Technology and Retail maintained the highest profitability.

Gross margins in 2QCY25 improved to 25.4%, up from 22.9% in 2QCY24, aided by operational efficiency gains, productivity improvements, better billing rates, and effective control over fixed costs.

Administrative expenses rose by 41% YoY during the quarter, primarily due to inflationary pressures. Conversely, finance costs decreased by 45% YoY, settling at PKR 76 million during 2QCY25, mainly because of a decline in interest rates.

The company reported an effective taxation rate of 11% in 2QCY25, compared to 11.5% in 2QCY24.

**Valuation:**

Systems Limited is currently trading at forward P/E multiples of 18.7x for CY25 and 17.4x for CY26.

*Courtesy – AHL Research*