Pashm-Shishe Iran, the country's oldest and largest maker of thermal, acoustic and moisture insulation, trading on the Tehran Stock Exchange under the ticker Kapshir, released its audited financial statements for the fiscal year ended 20 March 2026 (29 Esfand 1404): operating revenue rose 54% and net profit 95%, lifting the net margin from 32.2% to 40.8%. Yet behind these glowing figures sits an uncomfortable fact: the real sales volume of both of the company's main products has fallen for three straight years, and almost all of this growth is a product of inflation, not of a bigger business.
Background
Kapshir has operated since 1964 (1343 in the Iranian calendar) and has two main products: glass wool and Isogam (an asphalt-sheet waterproofing membrane). To read this year's report correctly you must separate two layers: the rial layer, which inflates with the inflation rate and the falling value of money, and the real layer, measured in tonnes and square metres actually sold. Over the past three years these two layers have moved in opposite directions, and that gap is the key to the stock. The same split between nominal growth and real earnings quality runs through our other under-the-lens analyses; for the basics of this kind of analysis, see Sahmino's introductory fundamental-analysis lesson.
The Fiscal 1404 Numbers: Striking Profitability, but Mostly Nominal
| Metric (million rial) | 1403 | 1404 | Growth |
|---|
| Operating revenue | 11,497,373 | 17,724,575 | 54% |
| Gross profit (margin) | 5,466,275 (47.5%) | 8,986,579 (50.7%) | 64% |
| Operating profit (margin) | 4,583,619 (39.9%) | 7,747,505 (43.7%) | 69% |
| Net profit (margin) | 3,706,540 (32.2%) | 7,232,922 (40.8%) | 95% |
Now weigh the same business on the real scale, sales volume. The production and sales charts in management's interpretive report show that both main products have shrunk for three straight years:
| Product | 1402 | 1403 | 1404 |
|---|
| Glass wool (tonnes) | 11,809 | 10,918 | 10,417 |
| Isogam (thousand m²) | 3,228 | 3,017 | 2,701 |
In other words, revenue rose 54% and net profit 95% even as the company actually sold less product. This apparent contradiction is exactly what fundamental analysis should expose: a bigger number is not necessarily a bigger business.
Drivers: Pricing and Sales Mix
Two drivers explain the margin improvement. First, product pricing has grown faster than domestic rial costs; in an inflationary economy, a company with pricing power can hold or even widen its margin even as its sales volume shrinks. Second, the sales mix has tilted slightly toward glass wool, with a gross margin of about 59%, at the expense of Isogam, whose gross margin is about 18%; every unit of shift in that mix pulls the average margin up.
On the balance-sheet side the picture is healthier. Total assets rose from 15.9 to 23.2 trillion rial, mainly on construction-in-progress for the new plant, and equity climbed from 6.7 to 14.5 trillion rial. Most important, the net-debt-to-equity ratio fell from 115% to 52%: a significant deleveraging. Operating cash flow was 3,776 billion rial, fully covering capital expenditure of about 2,063 billion rial with cash to spare.
Valuation: Three Angles
At the report's reference price of 13,410 rial and a market capitalisation of about 80,340 billion rial (6 billion shares), the current multiples are:
| Metric | Value |
|---|
| Price/Earnings (P/E), on adjusted EPS of about 1,205 rial | 11.1x |
| Industry-group average P/E | about 9.55x |
| Price/Book (P/B) | 5.54x |
| Price/Sales (P/S) | 4.53x |
| Enterprise value (EV) | 87,874 billion rial |
The stock's P/E sits a little above the group average, a point that should be read alongside the asset mix, not on its own.
The second angle is inflation-adjusted net asset value. The company's fixed assets are carried at historical cost, without revaluation. If we set aside the newly built portion (construction-in-progress for the new plant, about 9,073 billion rial, which is itself roughly at current cost) and apply an inflation-adjustment multiple to the remaining old assets, the valuation picture shifts:
| Scenario | Adjusted NAV (billion rial) | P/NAV |
|---|
| No adjustment (raw book) | 14,511 | 5.54x |
| 2x multiple on old assets | 21,137 | 3.80x |
| 3x multiple on old assets | 27,763 | 2.89x |
The biggest gap in this calculation is the land of the old factory. Because land is not depreciated, its book value still sits near its purchase price from the 1960s and 1970s (the 1340s and 1350s), and a 2x-to-3x multiple for it is deeply conservative. The same "trading below the current value of its assets" logic applies to other asset-heavy companies on the exchange.
The third angle is replacement value. The best benchmark for the current cost of building similar capacity is the company's own investment plan: spending done to date (9,073 billion rial) plus the remaining commitments to completion (102,768 billion rial), together about 111,840 billion rial. At the company's fiscal-year-end exchange rate (1,374,731 rial) that is about $81 million, and at the current free-market rate (about 1,882,000 rial) about $59 million. Now, comparing the company's enterprise value in rial (87,874 billion rial) with that same replacement cost gives a Q ratio of about 0.79: the market is pricing the company at roughly 79% of the cost of fully rebuilding its new production capacity, slightly below replacement value.
Risks and Audit Notes
Several cautions sit alongside this picture. First, capacity saturation: glass wool output in 1404 reached 11,759 tonnes, about 117% of official practical capacity (10,086 tonnes); further growth without new investment is essentially impossible. Second, dilution: a 140% capital increase (from 2.5 to 6 trillion rial) has been under way and, based on market data, appears already reflected in the share count. Third, import dependence: about 19% of the main raw materials (borax) is imported from Türkiye, and the notes to the accounts explicitly flag the impact of the winter-1404 war on the Türkiye import route; sanction and logistics risk here is real. Fourth, an accounting flag: the auditor's opinion is unqualified but carries an emphasis-of-matter paragraph; inventory has a net value of 3,623 billion rial while only 3,395 billion rial of it is insured. On the positive side, the previous auditor's qualified opinion for 1403 was not repeated in this year's report.
Outlook
This section is an estimate, not a recorded fact. Two projects shape the company's future: relocating the plant to the Shiraz Special Economic Zone, about 69% complete with an initial-commissioning horizon around December 2026 or January 2027 (Dey or Bahman 1405); and a glass-fibre project, a new product just getting started, with a commissioning horizon around 2028 (1407). If these plans proceed on schedule, the current capacity ceiling that today blocks real growth would rise; but until then, the remaining capital commitments (102,768 billion rial) must be financed, which partly explains the logic of the capital increase.
What to Watch
Three signals are worth tracking: first, whether the three-year decline in sales volume stops or reverses in 1405, the only true gauge of real growth; second, the actual commissioning timeline of the Shiraz plant against the announced horizon; and third, the continuity of the raw-material import route from Türkiye amid regional tensions. These can be followed alongside the coming quarterly reports and on Sahmino's stock-market prices page.
This report is prepared for financial information only and is not a buy or sell recommendation. Any final decision should rest on the reader's own risk tolerance and independent review, and if needed, consultation with a licensed financial adviser.
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