Codal is the system where every listed Iranian company is required to publish its reports. The problem is that a full set of financial statements runs to dozens of pages, and most newcomers give up after two. The good news: for an initial assessment you do not need to read all of it. There are six numbers that, once you know them, give you roughly eighty percent of the picture. This guide walks through those six and what question each one answers. If you want to know where these numbers sit within the broader logic of valuation, What Is Fundamental Analysis, and How Is a Stock's Intrinsic Value Estimated? is a better starting point.
Step zero: which report should you open?
Codal carries several kinds of report, and they do not carry equal weight:
- Monthly activity report: sales only. The fastest signal, but incomplete; it says nothing about profitability.
- Interim financial statements (3, 6 and 9 month): unaudited, or subject to a limited review. A fuller picture, but not yet definitive.
- Audited annual financial statements: the most reliable report, and the basis for serious comparisons.
A practical rule: before anything else, check whether the report is audited. The gap between unaudited and audited figures is sometimes significant, and comparing an unaudited figure against last year's audited one means comparing two different things.
The six numbers you need to find
An income statement works like a funnel, top to bottom. Revenue goes in, costs are subtracted one by one, and what remains at the bottom is net profit. Each step of that funnel answers a different question.
1. Operating revenue (sales)
The first line. It shows how much the company sold. On its own it means nothing; it has to be compared with the same period a year earlier. In an inflationary economy, sales growth below the inflation rate actually means a decline in real sales: a number that is called growth but is in practice a retreat.
2. Gross profit
Sales minus the cost of goods sold. Divide this figure by sales and you get the gross margin. That ratio tells you how much pricing power the company has. If sales have grown but the gross margin has narrowed, raw material costs rose faster than selling prices and the company could not pass the cost pressure on to customers. The reverse holds too: a rising margin usually signals bargaining power.
3. Operating profit (loss)
The single most important number in the whole report. It shows whether the company's core business is profitable, before bank interest, foreign exchange revaluation or asset sales enter the picture.
A company can post a positive net profit while running an operating loss: the factory itself is losing money, and the statement was pushed into the black only by selling a property or by deposit interest. This distinction is exactly where beginners get caught out. If you are only going to look at one number, this is it.
4. Net profit (loss) and earnings per share
Net profit divided by the share count gives earnings per share, or EPS. There is a trap here: if the company has carried out a capital increase, comparing this year's EPS with last year's without adjustment is meaningless, because the denominator has changed. For a clear illustration, see the Bank Mellat capital increase case, where registered capital rose almost tenfold and the old EPS figures became effectively incomparable.
5. Accumulated losses
This one is not in the income statement; it sits in the balance sheet, under shareholders' equity. If a company carries heavy accumulated losses, it is years away from paying a cash dividend even if it is profitable this year, because current profit must first absorb past losses. This number is the company's memory.
6. Operating cash flow
Found in the cash flow statement. Profit is an accounting concept; cash is the reality. A company that reports a profit but has negative operating cash flow has sold goods without collecting the money. If that persists, it is a serious warning. To see what that gap looks like in practice, the Shatran case is a good example: gross profit jumped 335%, yet operating cash flow was only 23% of net profit.
What each number answers
| Number | Where it is | Question it answers |
|---|
| Operating revenue | Income statement, first line | How much did it sell? |
| Gross profit | Income statement | How much pricing power does it have? |
| Operating profit | Income statement | Is the business itself profitable? |
| Net profit and EPS | Income statement, bottom line | What was left at the bottom of the funnel? |
| Accumulated losses | Balance sheet, shareholders' equity | How heavy is the past? |
| Operating cash flow | Cash flow statement | Did the profit actually turn into cash? |
A real example: when a smaller loss and an operating profit are two different stories
A good illustration of why operating profit and net profit must be separated is Saipa's (ticker Khesapa) nine month report for fiscal 1404 (2025/26). Over that period the company recorded a roughly 39% reduction in its loss and, more importantly, the prior period's operating loss turned into an operating profit.
The second point is the more meaningful news. A smaller loss can come from selling assets, but turning an operating loss into an operating profit means something changed inside the business itself, whether through higher selling prices or better control of production costs. The first is an event; the second is a potential structural shift.
This has to be read in a wider context, of course. Iran's automotive industry has wrestled with heavy accumulated losses for years, and one positive period does not mean the problem is solved. Iran Khodro is the telling case: its chief executive announced that in 1404 the company had moved out of loss for the first time in roughly eight years, yet the same company posted a loss of more than 22 thousand billion tomans in the first quarter of 1405 (spring 2026).
The lesson: one good quarter is not a trend.
The inflation lens: why 50% sales growth can be a retreat
This is the single most important adjustment an Iranian investor should get into the habit of making. Annual inflation for the year to Tir 1405 (June/July 2026) was 61%, according to the Statistical Centre of Iran. Now suppose a company grew its sales 50% over the same window. The number on paper is green, but set 50% growth against 61% inflation and real sales have in fact shrunk by about 7%.
A rule of thumb: divide the growth figure by the inflation figure. Any result below one means a real retreat. That one simple division cuts a great many "profit surges" back down to their true size.
Three common mistakes
1. Looking at one period instead of a trend. Put at least four consecutive quarters side by side. An exceptional quarter, good or bad, is usually an event rather than a pattern.
2. Ignoring the accompanying notes. The interesting parts of a report are usually hidden in the notes: legal claims, foreign currency debt, sales concentration on a single customer, and related party transactions. The main statements tell you what happened; the notes tell you why, and at what risk.
3. Forgetting inflation. Without an inflation adjustment, almost every Iranian company "grows". With one, the list gets shorter and more honest.
Conclusion
Reading a financial statement is not a skill that requires an accounting qualification. With six numbers and one simple habit, always comparing against the same period a year earlier and against the inflation rate, you can build a fair picture of a company's health. If you only have time for one number, look at operating profit; if you have time for two, put operating cash flow next to it. Together those two tell you whether the core business works and whether the money is actually being collected.
And most important of all: a financial statement does not tell you whether to buy or sell a stock. It only tells you what you are making a decision about.
What to watch
Interim reporting season is the busiest window on Codal. For every ticker you follow, know the publication date of the next report in advance, and on that day set the six numbers alongside the same period a year earlier. You can follow live prices for Tehran Stock Exchange tickers and indices on Sahmino's stock prices page, and if you want to learn the underlying concepts in a more structured way, Sahmino Learn lays out that path step by step.
This is an educational article and is not a recommendation to buy or sell any security. The tickers mentioned are given purely as teaching examples.
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