At-Tahur Limited closed the year ended 30 June 2026 with a much stronger profit result, but the quality of that improvement is mixed. Sales, milk output and operating profit all advanced, while finance cost barely moved. Yet reported profit did not translate into cash: the business absorbed heavy working capital, especially forage inventory and trade receivables, and relied on additional short- and long-term financing.
The constructive reading is that PREMA’s operating franchise gained momentum across raw milk, processed milk and yogurt, with volume expansion supported by higher production. The caution is that biological-asset fair-value accounting remains material, the reported gross spread narrowed, and the balance sheet carried substantially more debt to fund inventory, capex and receivables. This is an earnings recovery with real operating progress, but cash conversion is the decisive next test.
Results at a glance
The primary comparison here uses At-Tahur Limited’s audited separate financial statements, in Pakistani rupees, because the wholly owned subsidiary Prema Trading (Private) Limited began operations in October 2025 and the annual report explicitly says consolidated comparatives are not formally comparable. The subsidiary’s effect was small: FY2026 consolidated revenue was PKR 6.931 billion versus PKR 6.900 billion on the parent-only basis, and consolidated profit after tax was PKR 821.634 million versus PKR 821.419 million.
On that consistent parent-company basis, revenue from customers rose 22.0% to PKR 6.900 billion from PKR 5.655 billion. The income statement also records PKR 4.402 billion of gain on initial recognition of milk at fair value less costs to sell and PKR 1.298 billion of gains from changes in the fair value of dairy livestock. Together, those lines and customer revenue produced PKR 12.600 billion of total accounting output, up 18.3%.
Reported gross profit increased 11.3% to PKR 2.803 billion, slower than total accounting output because operating costs climbed 20.5% to PKR 9.797 billion. The gross spread on total accounting output therefore eased to 22.25% from 23.64%, a contraction of about 139 basis points. This is the appropriate reported-basis comparison; dividing gross profit only by customer revenue would mix incompatible accounting lines because milk-recognition and livestock gains sit above operating costs.
Profit from operations rose 34.7% to PKR 1.194 billion. Profit before levy and tax advanced 47.8% to PKR 946.9 million, and profit after tax increased 55.5% to PKR 821.4 million. Basic and diluted EPS rose to PKR 3.76 from PKR 2.42. The board proposed no cash dividend, citing operating requirements and the need to establish satisfactory operating cash flows.
What improved
The sales advance was broad. Before sales tax and discounts, raw-milk revenue increased 42.5% to PKR 1.399 billion, processed-milk revenue grew 11.0% to PKR 4.339 billion, yogurt revenue rose 23.8% to PKR 1.486 billion, and other product revenue increased 44.8% to PKR 989.0 million. The filing does not disclose a complete price-volume-mix bridge for these categories, so it would be speculative to assign the change precisely between pricing, volume and mix.
There is, however, clear operating volume evidence. Gross milk production increased 11.6% to 28.827 million litres from 25.821 million litres. Mature milk-producing animals increased 6.2% to 3,456, while immature animals rose 4.5% to 2,898. Pasteurised-milk production increased 8.4% to 11.888 million litres; yogurt output rose 14.7% to 2.244 million litres; butter production almost doubled; and cream-cheese production increased 25.0%. The wider production gains support the view that the revenue improvement was not merely an accounting or price effect.
External pricing also helped the backdrop. Pakistan Bureau of Statistics reported urban fresh-milk prices 6.66% higher year on year in May 2026, while milk products were up 7.87%. That makes a positive pricing contribution plausible, but it remains an inference rather than a company-disclosed split. The more defensible conclusion is that higher output and a firmer price environment worked together.
Below gross profit, cost discipline was better. Administrative expense was almost flat at PKR 361.0 million, while other expense fell 7.5% to PKR 656.2 million because the net loss on sale of dairy livestock declined. Selling and marketing expense increased 19.9% to PKR 751.9 million, broadly in line with the expanded distribution footprint and revenue growth. Before other income, the calculated operating subtotal rose 25.5% to PKR 1.034 billion from PKR 824.0 million.
Other income was also an important lift, rising to PKR 159.8 million from PKR 61.9 million. It included PKR 48.9 million of gain on disposal of an investment, PKR 40.3 million from settlement of a deferred-payment obligation, PKR 27.0 million of gain on sale of fixed assets and PKR 19.4 million of credit balances written back. These items are genuine reported income, but several are not recurring operating drivers. Excluding other income entirely, the underlying operating improvement was still meaningful, just less dramatic than the headline 34.7% growth in operating profit.
Finance cost was effectively flat at PKR 246.8 million versus PKR 245.2 million. Lower lease interest and lower interest on the workers’ profit participation fund offset higher mark-up on long-term and short-term financing. Because operating profit expanded while finance cost stayed stable, the transmission into pre-tax profit was strong. Levy and tax together were PKR 125.9 million, compared with PKR 112.5 million a year earlier.
What weakened / needs attention
The largest weakness is cash conversion. Despite PKR 821.4 million of parent-company profit after tax, net cash used in operating activities widened to PKR 692.5 million from PKR 460.1 million. On a consolidated basis the outflow was PKR 694.1 million. The difference is immaterial; the message is not. FY2026 earnings were accompanied by another year of substantial operating cash burn.
Working capital explains most of the gap. Consolidated inventories increased by PKR 765.8 million during the year, trade receivables absorbed PKR 211.3 million, advances and prepayments absorbed PKR 55.6 million, and stores absorbed PKR 24.2 million. A PKR 106.7 million increase in payables only partly offset these uses, leaving a PKR 920.3 million working-capital outflow.
The inventory build was deliberate but financially demanding. Year-end inventory nearly doubled to PKR 1.580 billion, mainly because forage and other consumables rose to PKR 1.466 billion from PKR 700.8 million. Management says it uses short-term Sukuk financing to buy cattle feed in the off-season at favourable prices and protect feed cost per litre. That can be economically sensible if the stocked feed is consumed efficiently, but it converts a procurement strategy into funding and liquidity risk until cash is released.
Trade debts rose 52.1% to PKR 626.7 million, faster than net revenue growth. The annual report does not disclose that the increase is impaired—indeed, the allowance for expected credit losses declined slightly—but collection discipline still matters. The combination of more inventory and more receivables means the next year’s cash outcome depends not only on profit growth but also on unwinding or stabilising these balances.
Borrowings rose accordingly. Long-term financing, lease liabilities and short-term borrowings totalled approximately PKR 2.215 billion at year-end, up from PKR 1.500 billion. Short-term borrowings alone increased to PKR 1.347 billion from PKR 955.7 million, while long-term financing rose to PKR 805.0 million from PKR 333.4 million. Cash increased to PKR 400.6 million and short-term investments stood at PKR 248.5 million, but estimated net debt still rose to roughly PKR 1.566 billion from PKR 833 million.
Liquidity was not distressed on the reported balance sheet: current assets of PKR 3.621 billion covered current liabilities of PKR 2.597 billion, lifting the current ratio to about 1.39 times from 1.24 times. But much of that improvement sits in forage inventory rather than cash. The balance sheet is stronger in nominal working capital and equity—equity rose 14.0% to PKR 6.958 billion—yet more leveraged and more dependent on inventory turning into production and sales.
Biological-asset accounting also deserves attention. Dairy livestock carried at PKR 4.755 billion represented about 45% of total assets, and the group recognised PKR 1.298 billion of fair-value gains from biological transformation and price changes. Independent valuers supported the year-end measurement, but the valuation requires judgement about animal age, condition, culling rates and foreign-market replacement values. These gains are integral to agricultural accounting, not automatically cash earnings.
Investment cycle and capacity
At-Tahur spent PKR 418.3 million on property, plant and equipment, up from PKR 169.3 million. Management added a 200-kilowatt solar system, is developing battery storage and biogas generation, expanded its distribution fleet, and introduced spring water and Gelato tubs. These projects can lower energy exposure and broaden the product portfolio, but they add to near-term funding needs while utilisation remains uneven.
Pasteurised milk output used about 56% of stated capacity and yogurt about 61%. Cream cheese was around 64%, while butter was only about 10% and the new spring-water line was at an early stage. The company says under-utilisation mainly reflects low market demand. This makes demand generation and route-to-market execution as important as adding capacity: the return on recent investment will depend on selling more through the existing asset base, not simply producing more.
AlphaGen model snapshot
The four approved AlphaGen model readings for PREMA are: Alpha QoQ Score 68.12; TTM Performance Score 84.08; 3Y Business Perf Score 51.49; and Sector Leadership Score 30.643. These are AlphaGen model outputs, not figures reported by At-Tahur, and they should be read as structured analytical signals rather than investment advice.
The model pattern is consistent with the financial statements: strong recent and trailing performance, but a more moderate multi-year record and weaker relative sector leadership. The audited numbers explain why the recent scores look better: FY2026 revenue, operating profit and net income all improved. The cash-flow deficit, rising debt and dependence on fair-value movements explain why a strong recent score should not be treated as a complete verdict.
What to monitor next
First, operating cash flow must move toward profit. The critical bridge is whether the large forage inventory is consumed without another comparable build and whether receivable growth slows. A positive earnings result with a third consecutive large cash outflow would weaken the quality of the recovery.
Second, watch the gross spread and feed economics. Customer revenue grew faster than milk output, but operating costs grew faster than total accounting output and forage consumed rose 27.4%. Management’s off-season procurement strategy needs to produce a lower and more stable feed cost per litre over time; otherwise the added inventory and financing burden will outweigh the purchasing benefit.
Third, watch borrowing mix and finance cost. FY2026 finance cost was flat despite a much larger closing debt balance, partly because different cost components moved in opposite directions. A full-year cost on the expanded financing base could be higher unless borrowing rates ease or working capital releases cash.
Fourth, track utilisation and new products. Better throughput in pasteurised milk, yogurt and cream cheese would improve fixed-cost absorption. Spring water, Gelato and the trading subsidiary can diversify revenue, but FY2026 subsidiary profit was only PKR 0.2 million, so they are not yet material earnings engines.
Finally, dividend capacity depends on cash, not accounting profit. The board declared a nil dividend despite EPS of PKR 3.76 and explicitly linked future payouts to satisfactory operating cash flow. That is a prudent signal: the next results should be judged less by whether net profit rises again and more by whether the business can fund growth internally.
Sources and methodology
Primary sources: PSX FY2026 financial-result notice; At-Tahur FY2026 annual report; PSX PREMA announcements page; and Pakistan Bureau of Statistics May 2026 price review.
All figures are from At-Tahur Limited’s audited FY2026 annual report and PSX result announcement unless stated otherwise. Percentage changes and ratios are calculated from reported amounts. Parent-company figures are used for like-for-like earnings comparisons; consolidated figures are used where the subsidiary effect is disclosed and immaterial. No derived fourth-quarter revenue series is used because the annual agricultural-accounting presentation does not support a clean quarter-only bridge across all lines.