LLUB reported a 6% YoY decline in PATMI during 1Q FY25, primarily driven by a 17% rise in distribution expenses associated with higher sales volumes. A 73% YoY reduction in net finance income also weighed on earnings, reflecting lower interest rates and diminished foreign exchange gains amidst a stable currency environment. While topline grew by 5% YoY, reversing the contraction seen in the prior three quarters, GP and EBIT margins contracted slightly to 35% (from 37%) and 25% (from 27%) respectively, due to elevated operational costs. Looking ahead, we expect retail demand to recover gradually with the easing of vehicle import restrictions, alongside improving industrial volumes supported by renewed activity in construction and tourism. Although export market volatility presents a near-term risk, we anticipate a progressive recovery. With a consistent dividend track record and limited capital expenditure plans, we forecast a payout ratio above 90% and DPS of LKR 16.00 in 2025E. We reiterate our HOLD recommendation with a target price of LKR 178.00 (2025E), implying a total expected return of 21%, inclusive of dividends.