The food basket is already showing an uneven but meaningful shift beneath the headline. Non-perishable food prices were up 9.4 percent year-on-year nationally, and by 10.9 percent in rural areas; wheat and wheat flour were among the sharpest movers, with urban wheat up 62.2 percent year-on-year and wheat flour up 54.4 percent, while rural wheat and wheat flour were up 63.5 percent and 62.7 percent, respectively.

Perishables, meanwhile, remain volatile enough to flatter or distort the headline depending on the month, as tomatoes, vegetables, potatoes, onions, and chicken continue to swing sharply in either direction. The food story, therefore, is not one of uniform acceleration; it is one of selective but politically sensitive price pressure in staples, partially masked by the usual noise in perishables.

That distinction matters because Pakistan may be entering a period where food inflation is not only a domestic supply-chain problem, but also an external commodity, climate, and fiscal problem.

The IMF’s latest review does not forecast a full-blown food shock; in fact, it frames the Middle East war shock as mostly energy-led, with more modest effects expected on food and core inflation. Yet that is precisely where the analytical risk lies.

Energy inflation does not remain energy inflation in an economy where diesel is embedded in irrigation, harvesting, freight, mandi movement, inter-city transport, and cold-chain economics. It begins at the pump, but it does not end there.

The fiscal outlay is already revealing the constraint. Following the fuel price shock, the government temporarily delayed further fuel price adjustments through a subsidy to oil marketing companies costing 0.1 percent of GDP, later unwound, while retaining a temporary reduction in petroleum levy on diesel.

Federal and provincial governments also announced targeted relief for vulnerable groups, including limited support for motorbike owners and small farmers, alongside subsidized public transport in the largest province.

All of this is expected to be budget neutral, which is reassuring only if one ignores what budget neutral means under an IMF programme: any cushioning of one shock must be paid for by compression elsewhere.

Pakistan does not have a food shock response sitting in a fiscal drawer. It has a constrained budget, a primary balance target, and a long history of converting commodity volatility into either arrears, subsidies, import mispricing, or administrative controls.

This is where the risk becomes less about today’s food inflation and more about the next two quarters. The war has already raised the cost and uncertainty around fuel; however, the more important food-system risk may lie in fertilizer.

Pakistan’s urea exposure may be manageable due to domestic production, but DAP is a different story.

A prolonged disruption in DAP supply chains, or even a sharp price increase at the wrong moment, could affect Kharif planting decisions. That does not mean immediate food inflation in June. It means farmers may alter input intensity, delay application, switch crops, accept lower expected yields, or rely more heavily on informal credit.

Such decisions do not show up in CPI immediately; they show up later in market arrivals, yield outcomes, farmgate prices, and substitution pressure across grains.

The global backdrop is not benign either. The latest official ENSO outlook points toward El Niño, with elevated probability of persistence through the northern hemisphere winter.

El Niño is not a commodity forecast by itself, and every event differs by timing, strength, and regional interaction; however, it raises the probability of weather anomalies across agricultural powerhouses and import-dependent regions. For Pakistan, the relevant point is not whether Brazil, Canada, the United States, Australia, India, or Southeast Asia each suffers a synchronized production shock.

The relevant point is that global commodity balance sheets are now tight enough in several places that weather risk does not need to be catastrophic to become price-relevant.

Corn is a useful example. USDA’s May outlook projects world corn production for 2026-27 below last year’s record, while consumption is expected to exceed production by 20MMT and global ending stocks, if realized, would fall to the lowest level since 2013-14. That matters for Pakistan not because Pakistan is a large corn importer, but because corn prices sit inside a broader feed, poultry, dairy, starch, and grain substitution complex.

Higher corn prices may be good for Pakistani exporters if exportable surplus exists; yet the same price signal can pull local grain prices upward, particularly when domestic market integration is weak and export parity begins to matter more than local affordability.

Rice presents a similar two-sided problem. Global rice output is projected to decline for the first time since 2015-16, while trade is expected to rise to a record level. That can create export opportunity for Pakistan, especially if competitors face weather or policy constraints.

However, export opportunity is not costless. In a poorly buffered domestic market, higher external prices do not merely improve export receipts; they can also transmit back into domestic wholesale and retail prices, especially when traders expect policy discretion.

The same rice price that improves the trade account can worsen the kitchen account.

The wheat channel is even more politically sensitive. Pakistan’s wheat market is still recovering from policy confusion, procurement withdrawal, stock mismanagement, and damaged farmer confidence.

Wheat flour prices in the CPI basket are already rising sharply on a year-on-year basis. A global grain rally, even if driven by corn or rice fundamentals, can create a substitution-effect pull on domestic wheat prices, not because wheat is perfectly integrated with those markets, but because traders, feed users, households, and policymakers do not operate in commodity silos.

Once grains begin repricing, relative prices adjust; and once relative prices adjust, administrative attempts to isolate wheat from the rest of the grain complex usually end in leakage, hoarding, smuggling incentives, or renewed subsidy pressure.

Edible oil is another pressure point. Pakistan’s edible oil import dependence has always made the food basket vulnerable to global oilseed and vegetable oil markets.

USDA’s current outlook shows stronger soybean oil pricing and continuing demand from biofuel use, while palm oil remains the largest traded vegetable oil but faces its own regional supply dynamics. This is not a peripheral concern. Cooking oil and ghee are mass-consumption items, and when global vegetable oil prices rise, Pakistan imports that inflation directly.

Unlike wheat, where the state still pretends it can manage the market through procurement legacy and flour-mill politics, edible oil is a cleaner external pass-through story: dollar prices, freight, exchange rate, taxes, margins, and retail impact.

Sugar, too, remains one weather event away from policy theatre. Global sugar markets are exposed to cane and beet conditions across major producers, while domestic sugar policy in Pakistan remains an impressive monument to inconsistency.

The country has only recently moved from export permissions to import anxieties, while domestic price controls and miller politics continue to operate in parallel. If global sugar prices firm up again, Pakistan’s policymakers will once again face the familiar choice between allowing domestic prices to adjust, subsidizing consumers, restricting trade, or pretending that raids on retailers constitute a supply-side policy.

The food shock risk, therefore, is not simply that prices may rise. Prices always rise somewhere in Pakistan’s food basket. The risk is that multiple transmission channels may converge at once: fuel into transport and mechanization; DAP into Kharif yields; El Niño into global crop uncertainty; higher grain prices into local substitution effects; edible oil into direct import inflation; corn and soybean prices into poultry and dairy; and fiscal constraints into delayed or distorted policy response.

Each channel is manageable in isolation. Together, they can convert a moderate inflationary impulse into a broader food-price episode.

The policy problem is that Pakistan’s instinctive response to food inflation remains administratively muscular and economically weak. When prices rise, the state tends to search for culprits rather than price signals; it prefers raids to data, bans to buffers, subsidies to targeting, and committees to market intelligence.

Yet the next food shock, if it comes, will not be solved at the retail counter. It will require pre-emptive fertilizer monitoring, credible Kharif acreage and input-use data, predictable trade policy, realistic wheat stock disclosure, and targeted income support that does not blow a hole through the fiscal programme.

There is also a necessary political economy distinction. Higher grain prices are not automatically bad for Pakistan if they improve farm incomes and export earnings. But in the absence of functioning storage, hedging, warehouse receipt financing, crop insurance, and transparent commodity markets, price gains rarely translate cleanly into farmer welfare. They are captured unevenly across traders, processors, large farmers, intermediaries, and exporters; meanwhile, consumers face the retail adjustment almost immediately. That is why food inflation in Pakistan is not only a price problem, but also a distribution problem.

The question, then, is not whether Pakistan is already in a food shock. It is not. The question is whether the system is prepared for one.

On present evidence, the answer is not reassuring. The latest inflation data show staple pressure; the IMF report shows limited fiscal space; global commodity outlooks show tightening in key grain and oilseed balances; and the climate outlook suggests elevated weather volatility across major agricultural regions.

An upcoming food shock is still a risk, not a forecast. But it is now a risk with enough moving parts to deserve serious policy attention. Waiting for the CPI headline to confirm it would be very Pakistani; it would also be too late.

But even as demand recovers, capacity has run far ahead of consumption.Years of aggressive capacity expansion have left producers saddled with a growing surplus of idle capacity. With exports slowing down, declining 1 percent this year, the burden has shifted on domestic markets to keep capacity operational. The numbers tell a familiar story.

Despite average monthly domestic dispatches growing 8 percent, capacity utilization has remained below 60 percent. Total offtake is also about 12 percent below the FY21 peak. The construction sector has yet to fully regain the momentum lost during the prolonged macroeconomic downturn.Between FY22 and FY25, domestic demand steadily deteriorated as inflation surged, interest rates climbed, and construction activity slowed.

During this period, exports stepped in to fill part of the gap growing from around 10 percent in the sales mix during FY22 and FY23 to 19 percent in FY25, helping producers keep kilns running even as local demand weakened. Export volumes more than doubled between FY18 and FY21 but then retreated as regional competition intensified and freight costs grew.

This year, exports lost their momentum which is offset by domestic demand but just. For margins, this is good news as producers have stronger pricing power in the domestic markets and logistics costs are lower.But volumetrically, the expansion surge that doubled capacity remains unaddressed. Much of this investment was undertaken during the optimism of CPEC and the FY21 boom when the then government announced a sweet real estate package for builders and subsidy schemes for buyers. The expected growth was cut short as the program came to an abrupt end. Demand was never the same since.

There is now another home loan subsidy in the works that is expected to temporarily boost housing construction. But even with another tax package that aids builders, any major shift in the market will only come if the government substantially raises the bar on development spending, and home buyers see a steady rise in their incomes relative to inflation and the growing burden of taxes. Since neither of these scenarios will play out in the foreseeable future in this country, cement producers will have to be satisfied with existing capacity just laying idle—and for most of the mid to large ones, it appears that they are going to be just fine.

The company is engaged in the production of steel bars, wire rods and billets

Pattern of Shareholding

As of June 30, 2025, AGHA has 604.879 million shares outstanding which are held by 6521 shareholders. Directors, their spouse and minor children have a majority stake of over 48.80 percent in the company followed by local general public holding 42.10 percent of AGHA’s shares.

Modarabas & Mutual funds account for 4.46 percent of the company’s shares while banks, DFIs and NBFIs hold 1.68 percent shares.

The remaining shares are held by other categories of shareholders.

Historical Performance (2021-25)

AGHA’s topline which rode an upward trajectory in 2021 and 2022 began to decline thereafter. Its bottomline staggeringly grew in 2021, however, followed a downhill journey after that. AGHA posted net loss in 2024 and 2025.

The company’s gross margin dropped in 2021 and 2022, followed by an uptick in 2023. In the following years, AGHA’s gross margin posted a negative value. Conversely, its operating and net margins strengthened in 2021, however, drastically fell thereafter (see the graph of profitability ratios).

The detailed performance review of the period under consideration is given below.

In 2021, Pakistan’s economy showed signs of recovery post the slowdown period of Covid-19. AGHA’s net sales grew by an impressive 47.90 percent year-on-year to clock in at Rs.19,858.24 million in 2021 on account of real estate boom.

However, GP margin sank from 25.30 percent in 2020 to 22.67 percent in 2021 as China, the top producer of steel, withdrew 13.50 percent tax rebate to its steel industry. While the prices sky rocketed, the global steel production rose by 9 percent year-on-year to clock in at 1.96 billion metric tons.

The steep rise in electricity tariff during the year also squeezed AGHA’s GP margin in 2021. Administrative expense inched up by 10 percent in 2021 due to higher payroll expense as the company expanded its workforce from 258 employees in 2020 to 310 employees in 2021.

Fee & subscription charges also grew during the year as the company completed its listing process. Selling & distribution expense spiked by 33.72 percent in 2021 due to higher salaries of sales force, carriage & freight charges as well as advertising & marketing expense incurred during the year.

In 2021, finance cost decreased by 17.24 percent year-on-year in 2021 owing to stable exchange rate and stagnant discount rate.

AGHA’s outstanding borrowings also dropped during the year as the company got listed on the Pakistan Stock Exchange and raised Rs.3.84 billion from institutional investors, high net worth individuals and general public.

Operating profit strengthened by 107.36 percent in 2021 with OP margin clocking in at 12.65 percent versus OP margin of 9 percent posted in 2020. Other income didn’t perform well in 2021 as markup on loan to associate companies which was the major head of “other income” until 2020 faded away in 2021 owing to low discount rate. Other expense also mounted by 72.29 percent in 2021 due to higher profit related provisioning and impairment loss booked on trade receivables.

AGHA recorded 64.78 percent year-on-year growth in its net profit which clocked in at Rs.2036 million in 2021 with EPS of Rs.3.62 versus EPS of Rs.2.96 recorded in the previous year. NP margin also strengthened from 9.20 percent in 2020 to 10.25 percent in 2021.

2022 was a rollercoaster ride for the steel industry. International steel prices touched an all-time high level of $1100 and then collapsed by 40 percent. The prices of major raw materials such as iron ore and coal also showed significant downward adjustments after peaking to an unsurpassed level. This was because of the demand uncertainty on the back of Russia-Ukraine conflict and a general economic slowdown.

Talking about the local scenario, energy slippages, high inflation, multiple discount rate hikes, dwindling foreign exchange reserves and sharp depreciation of Pak Rupee as well as devastating floods in the southern region of the country, the demand from the public and private sector remained subdued.

AGHA’s net sales grew by 29.16 percent to clock in at Rs.25,647.95 million in 2022. During the year, the company also commenced the production & sale of liquid gases.

However, high international prices of raw material for most part of the year coupled with Pak rupee depreciation resulted in a thinner GP margin of 21.41 percent in 2022. Gross profit in absolute terms grew by 21.94 percent in 2022. Administrative expense ticked up by 12.76 percent in 2022 due to higher payroll expense as number of employees surged to 395 employees in 2022.

Selling & distribution expense spiked by 23.91 percent in 2022 due to excessive salaries of sales force, carriage & freight charges, advertising & marketing expense as well as brokerage charges incurred during the year.

Finance cost surged by 51.59 percent year-on-year in 2022 on account of higher discount rate and increased borrowings. This pushed OP margin down to 10.40 percent in 2022 vis-à-vis OP margin of 12.65 percent recorded in the previous year.

In absolute terms, operating profit ticked up by 6.16 percent in 2022. Other expense gave another major blow to the bottomline as it grew by 245 percent in 2022 on account of exchange loss and impairment loss on trade receivables recorded during the year.

Other income lent a helping hand to the bottomline and grew by 26.67 percent in 2022 as the company made massive profit from its air separation unit.

In 2022, AISL installed an air separation unit from IPO proceeds of 2021. The bottomline of AISL shrank by 8.90 percent year-on-year in 2022 to clock in at Rs.1854.77 million with EPS of Rs.3.07 and NP margin of 7.23 percent.

In 2023, AGHA posted 19.75 percent year-on-year decline in its net sales which clocked in at Rs.20,582.21 million. This was on account of political uncertainty, unprecedented level of inflation and discount rate, elevated energy tariff, unfavorable exchange rate parity and import restrictions which squeezed the industrial activity by 25 percent.

High international scrap prices coupled with Pak Rupee depreciation also took toll on the gross profit by 12.21 percent in 2023.

On the positive front, GP margin slightly improved to clock in at 23.42 percent in 2023 due to upward price revisions. Administrative expense dropped by 7 percent in 2023 due to austerity measures put in place by the company.

One of those measures was downsizing from 395 employees in 2022 to 350 employees in 2023. Selling & distribution expense plunged by 9.57 percent in 2023 due to considerable decline in advertising & marketing budget for the year.

Despite lower sales volume recorded in the year, carriage & freight charges continued to enlarge owing to a spike in the prices of POL products.

Finance cost multiplied by 50.23 percent in 2023 due to higher discount rate. Overall borrowings dipped during the year as evident in the gearing ratio of 58 percent recorded in 2023 versus gearing ratio of 60 percent in the previous year.

Operating profit tapered off by 63.22 percent in 2023 with OP margin drastically falling down to 4.76 percent.

AGHA recorded 76 percent decline in its other expense in 2023 which was the result of lower profit related provisioning and lesser impairment loss booked on trade receivables.

Other income grew by 15.78 percent in 2023 which was due to higher profit recognized from air separation unit and higher markup income recognized from loan to associates.

Despite all the measures undertaken to control its cost and operating expense, AGHA recorded 51.21 percent slump in its net profit which clocked in at Rs.904.896 million in 2023 with EPS of Rs.1.5 and NP margin of 4.40 percent.

In 2024, AGHA’s topline recorded a massive decline of 33.48 percent to clock in at Rs.13,691.82 million. This was due to stagnated construction activity in the country owing to exorbitant construction costs on account of fluctuating international prices of raw materials, import restrictions, Pak Rupee depreciation, heightened energy tariff, gas supply constraints and frequent power shortages.

Poor politico-economic backdrop and shattered investor confidence also pushed down the performance of long steel industry.

Tax exemptions provided to FATA/PATA region which was initially aimed to promote development have widely been misused by selling steel across the country without paying taxes. This gobbled up the share of the legitimate steel producers.

Despite constrained sales volume, cost of sales only dropped by only 9.15 percent in 2024, resulting in gross loss of Rs.628.31 million recorded in 2024.

Administrative expense ticked up by 5.86 percent in 2024 due to higher payroll expense which was the result of inflationary pressure as the number of employees stood intact at 350 in 2024.

Distribution expense nosedived by 12.43 percent in 2024 due to lower carriage & freight as well as brokerage charges incurred during the year owing to lower sales volume.

Finance cost surged by 42.81 percent in 2024 due to higher discount rate and higher working capital related borrowings.

Nevertheless, gearing ratio fell to its lowest level of 48 percent in 2024 due to increase in the authorized capital by issuance of preference shares as well as surplus recorded on the revaluation of fixed assets.

AGHA recorded a hefty operating loss of Rs.5819.865 million in 2024. Other expense rose by a drastic 1387.22 percent in 2024 due to provision booked for writing down stock-in-trade to NRV. This was necessary as the company encountered fire incident during the year.

The company also booked impairment loss on damaged fixed assets and trade receivables during the year. Other income grew by 86.58 percent in 2024 due to insurance claim and higher markup income on loan to associates.

AGHA recorded net loss of Rs.5088.565 million in 2024 with loss per share of Rs.8.41.

In 2025, AGHA’s topline further deteriorated by 22 percent to clock in at Rs.10,674.62 million. This was due to thinner demand of long steel products in the local market due to low purchasing power of consumers, restricted construction financing and unregulated subsidized imports in the FATA/PATA region. AGHA made no export sales of Iron ore in 2025.

Demand destruction coupled with the volatility in the prices of global scrap and billet, elevated energy cost and Pak Rupee depreciation resulted in gross loss of Rs.1977.49 million in 2025, up 214.73 percent year-on-year.

Administrative expense surged by 60.65 percent in 2025. While payroll expense dipped during the year as number of employees drastically fell from 350 in 2024 to 270 in 2025, radical spike in legal & professional charges and hefty Port Qasim Authority charges incurred during the year were the main culprits behind elevated administrative expense in 2025.

The port charges worth Rs.94.786 million were recognized in lieu of land use, annual maintenance and non-utilization fee for the period of 2017 to 2024.

Distribution expense escalated by 25.34 percent in 2025 due to higher carriage & freight charges as well as brokerage charges incurred during the year.

Monetary easing resulted in 8.42 percent downtick in finance cost in 2025. Operating loss mounted by 21.20 percent to clock in at Rs.7053.92 million in 2025.

Other expense dipped by 56.54 percent in 2025 due to high-base effect as the company recorded provision for write down of inventory to NRV and impairment loss on damaged fixed assets in the previous year.

In 2025, other expense only comprised of impairment loss on trade receivables. Other income also deteriorated by 62.15 percent in 2025 as the company recognized insurance compensation in the previous year.

Profit from air separation unit also thinned down in 2025. During the year, the company reversed the provision worth Rs.164.352 million booked for write down of finished goods to NRV following the sale of finished goods during the year. This was also reflected in other income in 2025.

Net loss escalated by 41.72 percent to clock in at Rs.7211.418 million in 2025. This translated into loss per share of Rs.11.92 in 2025.

Recent Performance (9MFY26)

During the first quarter of the ongoing fiscal year, AGHA’s net sales dropped by 9.35 percent to clock in at Rs.7324.951 million. This was because of slowdown in the construction and real-estate activity and surge in the import of scrap and finished steel.

Cost of sales dipped by 9.05 percent in 9MFY26 – lesser than the decline in net sales – due to elevated energy cost and volatility in the prices of global scrap and billet. Intense competition from FATA/PATA region didn’t allow the company to revise its prices.

The company recorded gross loss of Rs.1088.94 million in 9MFY26, down 6.95 percent year-on-year.

Administrative expense plunged by 35.46 percent in 9MFY26 apparently because the company has been aggressively streamlining its workforce since 2023. Distribution expense also shrank by 23 percent in 9MFY26 due to lower sales volume.

Monetary easing resulted in 31.43 percent drop in finance cost in 9MFY26. AGHA recorded 25.95 percent thinner operating loss to the tune of Rs.3993.56 million in 9MFY26. Other expense fell by 89.66 percent in 9MFY26 probably due to lower impairment loss on trade receivables.

Other income also fell by 84.41 percent in 9MFY26 seemingly due to lower profit on bank deposits and lower profit from air separation unit.

Net loss tumbled by 47.19 percent to clock in at Rs.2730.44 million in 9MFY26. This translated into loss per share of Rs.4.51 in 9MFY26 versus loss per share of Rs.8.55 recorded in 9MFY25.

Future Outlook

Withdrawal of FATA/PATA exemptions is a positive omen for the local steel industry. Reconstruction and rehabilitation in the flood affected areas may also spur demand.

On the flipside, with sustained decline in the purchasing power of consumers, high property prices, excise duties and taxes as well as wavering consumer confidence, residential construction doesn’t promise any sound recovery.

The company is in the process of restructuring its loans which is expected to improve its liquidity position as short-term loans will be converted into long-term obligations with 10-year tenor.

The company will also complete Mi.Da rolling mill project from available insurance proceeds and internal cash flow generation. This will buttress its operational efficiency.

Although WPI eased slightly from last month, it remains elevated at nearly 13 percent year-on-year. Unsurprisingly, transportable goods continue to drive the increase, having risen by an average 38 percent over the past two months.

High-speed diesel, petrol, kerosene oil, mobil oil and furnace oil together account for roughly 11 percent of the WPI basket, compared to just 2.9 percent and 2.5 percent in the urban and rural CPI baskets, respectively.

Diesel alone carries a weight of 5.5 percent in WPI, followed by furnace oil at 3.3 percent and petrol at 1.6 percent. Their prices have risen 70 percent, 44 percent and 62 percent year-on-year, respectively.

The on-again, off-again nature of the US-Iran conflict, coupled with recent developments, suggests the oil market may not yet be out of the woods. That matters because fuel price transmission to retail inflation tends to be swift, and the impact is already evident in CPI readings.

The next phase of inflation transmission is likely to emerge from a broader range of transportable goods and manufactured products. Prices of soaps and detergents, chemicals, construction materials, apparel and plastic products have all been steadily climbing in the WPI. Unlike motor fuels, the pass-through to retail prices in these categories tends to occur with a lag.

Some evidence of this is already visible. Footwear prices, for instance, have risen 29 percent month-on-month in CPI, but corresponding WPI inflation stands at 51 percent, suggesting additional retail price adjustments may still be in the pipeline. Appliances and vehicles have also recorded sharp increases, with some registering the highest monthly gains on record. It would be surprising if these pressures do not eventually find their way into consumer inflation.

Food inflation, meanwhile, has remained relatively contained, barring wheat, thanks largely to favourable crop outcomes. But even that resilience faces a test. Everything ultimately needs to be transported, and wholesalers cannot indefinitely absorb higher logistics costs. So far, they largely have.

Adding to the uncertainty is the growing likelihood of a strong El Niño event. If weather patterns deteriorate, the inflation outlook could take on a very different complexion, particularly for food prices. That, however, is a story for another day, hopefully not one that catches policymakers off guard.

The inflation narrative would be incomplete without mentioning persistent anomalies in the WPI itself. Questions remain over the PBS’s treatment of industrial electricity tariffs, where the index appears to overstate costs by failing to fully capture downward revisions implemented earlier in the year.

More puzzling still is the treatment of cotton yarn prices, which have remained unchanged in the WPI for 55 consecutive months. That belongs more in the category of things that never happened than in an inflation index. Market evidence overwhelmingly suggests that yarn prices have experienced frequent and often significant fluctuations over this period, none of which appear to have found their way into the official series.

These shortcomings do not fundamentally alter the broader message coming from wholesale inflation. If anything, they merely cloud the precision of the signal. The signal itself remains clear enough: a substantial portion of the recent increase in wholesale prices has yet to complete its journey through the supply chain. As things stand, CPI inflation may still have some catching up to do.

Pattern of Shareholding

As of June 30, 2025, INKL has a total of 9.675 million shares outstanding which are held by 1393 shareholders.

Local general public has the majority stake of 53.88 percent in the company followed by directors, CEO, their spouse and minor children holding around 35.51 percent shares.

The remaining shares are held by other categories of shareholders.

Financial Performance (2019-25)

Except for a year-on-year plunge in 2021 and 2023, INKL’s topline rode an upward trajectory over the period under consideration. Conversely, its bottomline shrank until 2021 where the company recorded net loss.

INKL’s bottomline recovered from net loss in 2022 and remained constant in 2023. This was followed by a drastic fall in the company’s bottomline in 2024. This was despite tremendous topline growth registered in 2024.

In 2025, INKL’s topline and bottomline attained an unprecedented level.

The company’s margins considerably eroded in 2019. In 2020, gross and operating margins rebounded while net margin continued to slide. All the margins depicted a fall in 2021 followed by recovery in the subsequent two years. In 2024 and 2025, INKL’s margins eroded except for an uptick in net margin in 2025 (see the graph of profitability ratios).

The detailed performance review of the period under consideration is given below.

In 2019, INKL’s topline grew by 14.72 percent year-on-year to clock in at Rs. 451.10 million. This was on the back of increase of volume, prices and depreciation of Pak Rupee. The company achieved capacity utilization of 75.54 percent in 2019 as both local and export orders increased.

Cost of sales grew on the back of inflation, hike in commodity prices, elevated fuel and energy prices as well as Pak Rupee depreciation. This resulted in 45.41 percent decline in gross profit with GP margin falling 14.96 percent in 2018 to 7.12 percent in 2019. Operating expense surged by 28 percent year-on-year in 2019 on account of higher payroll expense, conveyance charges as well as depreciation.

The company hired additional resources which took its workforce from 127 employees in 2018 to 191 employees in 2019. INKL recorded other income of Rs.11.13 million in 2019 due to exchange gain, gain on translation of foreign currency debtors as well as hefty dividend income earned during the year. Other expense slid by 14.94 percent in 2019 due to lower profit related provisioning made during the year.

Operating profit plummeted by 15.63 percent in 2019 with OP margin slipping from 6 percent in 2018 to 4.42 percent in 2019. INKL was able to cut down its finance cost by 17.54 percent in 2019 despite higher discount rate. Net profit declined by 23.63 percent year-on-year in 2019 to clock in at Rs.10.24 million with EPS of Rs.1.06 versus EPS of Rs.1.39 recorded in the previous year. NP margin slumped from 3.41 percent in 2018 to 2.27 percent in 2019.

In 2020, INKL registered 19.14 percent year-on-year rise in its net sales which stood at Rs.537.46 million. This was due to robust performance in the first three quarters of 2020 before the outbreak of COVID-19. However, lockdown imposed during the 4th quarter of the year resulted in idle capacities, supply chain impediments and cancellation of orders across the industry.

As a result, INKL achieved capacity utilization of 70.05 percent in 2020. Due to improved volume and prices during the most part of the year, as well as cost control measures put in place by the management, INKL registered 59.74 percent year-on-year rise in its gross profit with GP margin picking up to 9.54 percent in 2020.

Operating expense fell by 1.46 percent in 2020 as workforce was streamlined to 152 employees which resulted in lower payroll expense. Due to restriction on travelling, conveyance charges also dropped during the year. Other income declined by 80.41 percent in 2020 due to no exchange gain and gain on translation of foreign currency debtors recorded during the year.

Dividend income also ticked down in 2020. Conversely, other expense mounted by 14.36 percent in 2020 due to higher profit related provisioning made during the year.

The company was able to strengthen its operating profit by 51.29 percent over last year with OP margin scaling up to 5.61 percent in 2020. Finance cost magnified by 156.24 percent in 2020 due to higher discount rate for most part of the year, elevated exchange loss as well as increased borrowings. This coupled with higher effective tax rate due to prior year taxation drove INKL’s net profit down by 24.45 percent in 2020 to clock in at Rs.7.73 million with EPS of Rs.0.8 and NP margin of 1.4 percent.

INKL recorded 9.2 percent year-on-year plunge in its net sales which clocked in at Rs.488.09 million in 2021. Slowdown of global economy due to COVID-19 as well as imposition of lockdowns time and again during the year dented its sales volume. The company’s capacity utilization fell to 57.75 percent in 2021.

Hike in global cotton and yarn prices as well as revision of gas tariff and non-availability of gas during winter months drove up INKL’s cost of sales. This resulted in 21.30 percent year-on-year fall in gross profit with GP margin sinking to 8.27 percent. Operating expense inched up by 3.44 percent in 2021 due to slightly increased salaries although workforce size remained almost intact during the year.

Other income surged by 181.24 percent in 2021 on account of higher dividend income, grant income and gain on sale of investments. INKL also recorded exchange gain of Rs.0.488 million during the year. Other expense tumbled by 68.76 percent in 2021 due to lower profit related provisioning done in 2021.

Operating profit contracted by 19.53 percent in 2021 with OP margin dropping to 4.97 percent. Finance cost enlarged by 32.72 percent in 2021 despite monetary easing due to higher mark-up on MTF salaries & wages (COVID-19) and other mark-up incurred during the year. INKL recorded net loss of Rs.0.05 million in 2021 with loss per share of Rs.0.01.

INKL posted a staggering 37.32 percent year-on-year escalation in its net sales which clocked in at Rs.670.26 million in 2022. This was on the back of revival in both local and export order coupled with improved prices and Pak Rupee depreciation which made export sales more worthwhile.

Due to increased demand, the company was able to employ its capacity efficiently with capacity utilization clocking in at 70.43 percent in 2022. Gross profit spiraled by 48 percent in 2022 due to better absorption of fixed overheads, upward price revision, elevated volumes and currency depreciation. 11.18 percent increase in operating expense in 2022 was primarily the effect of higher payroll expense as the number of employees increased to 181 in 2022.

Other income multiplied by 56.83 percent in 2022 due to higher exchange gain, dividend income, gain on disposal of property, plant and equipment as well as reversal of provision on ECL.

Higher profit related provisioning drove up other expense by 423.47 percent in 2022. Operating profit strengthened by 73 percent year-on-year in 2022 with OP margin climbing up to 6.27 percent. Finance cost dropped by 18.38 percent in 2022 due to lower other markup and mark-up incurred on export refinance facilities. INKL was able to pull its bottomline out of net loss and recorded net profit of Rs.22.08 million in 2022. This translated into EPS of Rs.2.28 and NP margin of 3.29 percent.

The political and economic instability prevailing in the country, high cost of doing business coupled with global recession took its toll on the net sales of the company which dwindled by 8.77 percent to clock in at Rs.611.49 million in 2023.

INKL’s capacity utilization drastically dropped to 46.53 percent in 2023 in line with reduced demand. Nevertheless, gross profit spiraled by 35 percent year-on-year in 2023 with GP margin flying up to 13.2 percent. This was due to higher margins on exports, cost control measures and the company’s ability to pass on the impact of high cost to its consumers.

High cost was the result of sky-rocketed inflation, shift to expensive imported cotton due to damage of local cotton produce owing to devastating floods, Pak Rupee depreciation as well as upward revision in gas and power tariff. 36 percent high operating expense incurred in 2023 was the consequence of higher payroll expense although the number of employees was streamlined to 121 in 2023.

Higher fee and subscription charges, depreciation as well as motor vehicle & conveyance charges also played their role in inflating the operating expense in 2023. Other income thinned down by 27.9 percent in 2023 mainly on account of exchange loss and loss and loss on disposal of investment. Higher provisioning for WWF and WPPF drove other expense up by 34.49 percent in 2023.

INKL was able to record 18.96 percent enhancement in its operating profit with OP margin reaching its optimum level of 8.19 percent in 2023. Finance charges continued to slide during the year due to significantly lower outstanding loans in 2023. Higher taxation due to the effect of prior year pushed down net profit by 0.06 percent in 2023 to clock in at Rs.22.072 million in 2023.

However, EPS remained intact at Rs.2.28 in 2023. NP margin boasted its highest level of 3.61 percent in 2023.

In 2024, INKL’s topline dipped by 39 percent to clock in at Rs.850.51 million. This came on the back of well-timed execution of BMR initiatives and the company’s ability to grab export opportunities besides focusing on local niche markets. The company achieved capacity utilization of 57.68 percent in 2024 and produced 749,825 pieces.

High cost of raw materials as well as elevated energy tariff resulted in 44.90 percent hike in cost of sales in 2024. This resulted in 0.86 percent uptick in gross profit with GP margin falling down to 9.57 percent in 2024. Operating expense ticked up by 2.72 percent in 2024 mainly on account of higher payroll expense due to inflationary pressure and increase in the number of employees. INKL’s factory workforce stood at 168 employees in 2024.

Other income slid by 28.69 percent in 2024 due to lower gain recorded on the disposal of property, plant & equipment. Other expense also dropped by 27.79 percent in 2024 due to lower profit related provisioning done during the year. Operating profit ticked up by 10.37 percent in 2024, however, OP margin plunged to 6.48 percent.

Finance charges escalated by 121 percent in 2024 due to higher discount rate and increased utilization of short-term working capital lines. INKL’s bottomline eroded by 49.97 percent to clock in at Rs.11.043 million with EPS of Rs.1.14 and NP margin of 1.30 percent.

In 2025, INKL’s topline jumped up by 42.34 percent to clock in at Rs.1210.57 million. This came on the back of increased volume in both local and export markets. Local sales which constituted 42.53 percent of the overall sales mix of INKL in 2024, mounted by 80 percent to clock in at Rs.654.110 million.

Local sales represented 53.88 percent of the sales mix of INKL in 2025. Export sales also mounted by 14.05 percent to clock in at Rs.554.22 million in 2025. In anticipation of higher demand, the company also enhanced its capacity in the value added segment. 43.57 percent escalation in cost of sales during 2025 was the result of elevated energy tariff and higher prices of raw materials.

While gross profit picked up by 30.66 percent in 2025, GP margin diminished to 8.79 percent. One of the company’s export client demanded delivery via air which resulted in a spike in freight charges during the year.

Overall operating expense recorded 9.17 percent rise in 2025. Other income mounted by 130.65 percent in 2025. This mainly comprised of gain on disposal of investments in mutual funds. The company also recorded exchange gain in 2025 versus exchange loss in the previous year.

The major component of INKL’s other income was dividend income coming from its investments in blue-chip stocks. Other expense surged by 83.66 percent in 2025 due to lower profit related provisioning done during the year. However, other expense was completely offset by other income, resulting in net other income of Rs.7.76 million, up 162.18 percent year-on-year.

INKL recorded 42.78 percent stronger operating profit in 2025 with OP margin staying intact at 6.50 percent. Finance cost inched up by 3.79 percent in 2025 despite lower discount rate. This was due to massive spike in short-term liabilities during the year.

INKL’s net profit registered a whopping 179.45 percent improvement to clock in at Rs.30.859 million in 2025. This translated into EPS of Rs.3.19 and NP margin of 2.55 percent in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, INKL registered 22.61 percent year-on-year decline in its net sales which clocked in at Rs.693.296 million. Local sales continued to thrive during the period, attaining 78.22 percent share of the overall sales mix of INKL in 9MFY26 versus its share of 56.60 percent in 9MFY25.

Conversely, export sales drastically fell by 61.73 percent to clock in at Rs.145.94 million in 9MFY26. This was due to elevated pricing pressure, tariff constraints as well as challenging geopolitical and macroeconomic conditions in the major export markets of INKL.

Respite in cost of sales coming on the back of stable prices of raw materials resulted in 4 percent uptick in the company’s gross profit in 9MFY26 with GP margin clocking in at 11.50 percent versus GP margin of 8.55 percent recorded in 9MFY25. Operating expense surged by 13.47 percent in 9MFY26 due to enhancement of the company’s operations and inflationary pressure.

Other income deteriorated by 34.31 percent in 9MFY26 due to thinner dividend income and a downtick recorded in gain on disposal of investments. Other expense also fell by 36.87 percent in 9MFY26 due to lower provisioning done for WWF and WPPF.

INKL recorded 9.25 percent diminution in its operating profit in 9MFy26 with OP margin clocking in at 7.67 percent versus OP margin of 6.54 percent recorded in 9MFY25.

Finance cost escalated by 33.74 percent in 9MFY26 due to increased utilization of working capital lines as the company offered extended credit terms to its customers to boost rapport and attract demand. This resulted in net profit of Rs.13.085 million in 9MFY26, down 45.71 percent year-on-year. EPS stood at Rs.1.35 in 9MFY26 versus Rs.2.49 in 9MFY25.

NP margin also shrank from 2.69 percent in 9MFY25 to 1.89 percent in 9MFY26.

Future Outlook

While INKL has been able to sustain its sales volume by grabbing the upcoming opportunities in both local and export, focusing on niche markets and enhancing its capacity by deploying timely BMR initiatives, it is unable to improve its margins and profitability owing to high cost of sales.

The main culprit which erodes INKL’s profitability is high energy tariff. The company has recently launched a 100 KW solar power project with another 150 KW solar power project in the pipeline. This will lessen INKL’s reliance on the national grid and keep a check on its cost of sales which will ultimately allow it to perform better in the face of challenging pricing pressure in the export market.

The company should also seek diversity on both supply and demand front to ensure seamless and undisrupted supply and sustained demand.

As it currently stands in 10MFY28, the passenger car segment continues to dominate the automobile industry expanding 52 percent year on year to over 127,000 units. The market is more fragmented than before with traditional sedans no longer the undisputed aspiration of middle-income households. Toyota’s Corolla, Yaris, and Cross lineup remain strong with volumes crossing 30,000 units and growing 65 percent year on year, while Honda’s Civic and City rose 52 percent. Despite this recovery, sedan volumes remain well below their historical peaks, reflecting either constrained purchasing power or a consumer preference shift toward larger vehicles. The latter is visible from the growing share of SUVs in the total sales mix.

At the lower end of the market, Suzuki leads through scale. Alto remains the country’s most popular passenger vehicle, although its share of the passenger car market has edged lower as competing models gain traction. More interesting is the emergence of a broader product mix. Swift has maintained its resurgence despite being priced close to entry-level sedans, while Every continues to replace the retired Bolan faster than many anticipated. It is evident that commercial mobility demand is recovering alongside consumer demand.

The biggest shift is occurring in the SUV segment where competitive landscape is rapidly evolving. Sazgar’s Haval lineup has become one of industry’s defining success stories, with volumes rising 73 percent year on year to nearly 15,000 units. The company has begun deliveries of the Tank 500, further expanding its footprint in the premium market. Hyundai’s Tucson and Santa Fe lineup also posted healthy growth, but competition is becoming increasingly intense as Chinese brands steadily expand their presence.

This competitive pressure is already being felt by established players. Indus Motor has flagged increasing competition for Hilux from BYD’s Shark pickup in urban markets, one of the first indications that Chinese entrants are beginning to challenge incumbents beyond the SUV category. What was initially viewed as a niche challenge is now developing into a broader market shake up as consumers gain access to newer technologies and feature-rich alternatives.

Meanwhile, two- and three-wheeler sales are providing the clearest indication of rapid demand mobility. Volumes grew 32 percent year on year to over 1.6 million units. Affordability remains a central concern for most households. Much like Alto in the passenger car segment, motorcycles are the preferred solution for consumers seeking fuel efficiency and lower operating costs.

The challenge now is less about generating demand and more about managing its consequences. Every increase in vehicle sales raises demand for imported fuel and imported components, both of which ultimately feed into the external account. The risk has become more pronounced as geopolitical tensions in the Middle East continue to create uncertainty around energy prices and shipping routes. Any disruption to CKD supply chains or a sustained increase in oil prices would test how lasting the current recovery will be.

The industry is therefore entering a very different phase of its recovery. Demand is no longer the primary concern; competition is. Chinese brands are steadily expanding their footprint, consumer preferences are shifting and the new auto policy promises to lower some of the protections that domestic assemblers have long enjoyed. EVs, PHEVs and NEVs are also getting concessions. For consumers, this could mean greater choice and better value. For manufacturers, however, the challenge will be adapting to a market where volume growth alone is no longer enough. At the same time, policymakers will have to walk a tightrope between encouraging industrial expansion and containing the external pressures that accompany it. The next chapter for Pakistan’s auto sector will be defined by how well it manages this transition.

The weakness was broad-based, but diesel took the harder hit. High-speed diesel sales fell in May, down 32 percent year-on-year and 17 percent month-on-month. This is worrying because HSD is closely linked with goods transport, agriculture activity, and the broader movement of the real economy. Part of the decline reflects higher prices, but smuggling and slower economic activity also appear to have weighed on formal volumes.

Motor spirit sales were relatively more resilient, but only in comparison. Petrol sales were down 12 percent year-on-year while remaining almost flat month-on-month. The decline is still meaningful, especially considering that petrol is usually stickier due to urban commuting demand. Average petrol prices were around Rs402 per litre in May 2026, up 59 percent year-on-year, while average diesel prices were also above Rs401 per litre, up 57 percent year-on-year.

Furnace oil remained the most volatile category. FO sales fell by 64 percent year-on-year and 79 percent month-on-month. The sharp monthly fall reflects normalization after higher April offtake, along with availability of RLNG cargoes and higher hydel-based power generation, which reduced the need for expensive FO-based power generation.

The cumulative picture looks less weak, but only on the surface. In 11MFY26, total OMC were up just 1 percent year-on-year. Excluding FO, volumes increased 2 percent year-on-year to around 14.4 million tons. Petrol sales were up 2 percent, HSD was up 1 percent, while FO sales were down 17 percent.

The headline 11-month growth therefore does not point to a strong recovery. It mostly shows that earlier months had provided some support before the price shock became more visible. May’s numbers are a clearer signal of where demand may be heading if fuel prices remain elevated.

The outlook remains cautious. With global oil prices volatile, local fuel prices high, and household budgets already stretched, petroleum demand is likely to stay weak in the near term. Petrol may perform slightly better than diesel because people still need it for daily commuting, but non-essential travel could slow further.

HSD volumes remain the bigger concern, as sustained weakness would point to pressure on transport, agriculture, and broader commercial activity. FO will remain dependent on the power generation mix and RLNG availability.

For now, the OMC sales story is not one of growth. It is one of demand adjustment. The formal fuel market is absorbing the impact of high prices, weak affordability, and changing power-sector demand. Unless prices ease or economic activity picks up meaningfully, monthly volumes are likely to remain soft, even if full-year numbers still manage to look broadly flat.

Pattern of Shareholding

As of June 30, 2025, DAAG has a total of 4 million shares outstanding which are held by 2,536 shareholders. Local general public has the majority stake of 47.93 percent in the company followed by directors, CEO, their spouse and minor children having a stake of 41.41 percent in the company. Data Enterprises (Private) Limited, an associated company of DAAG, accounts for 9.87 percent of its shares. The remaining shares are held by other categories of shareholders.

Historical Performance (2019-25)

Except for a marginal downtick in 2020 and 2025, DAAG’s topline boasted reasonable growth over the period under consideration. The bottomline posted a plunge in 2022, 2024 and 2025 with net loss reported in 2025. The margins depict an oscillating pattern over the years. In 2019, gross and operating margins posted downtick while net margin picked up.

This was followed by a considerable rebound in all the margins in 2020. In 2021, gross margin fell while net and operating margins inched up. The subsequent two years marked significant augmentation in DAAG’s margins except for a downtick in net margin in 2022. In 2024, gross and operating margins strengthened while net margin slid. All the margins registered their lowest levels in 2025. The detailed performance review of the period under consideration is given below.

In 2019, DAAG’s topline grew by 13.67 percent year-on-year to clock in at Rs.148.44 million. During the year, the company processed the seeds of cotton and wheat and produced hybrid corn. The revenue proceeds from seeds as well as delinting services posted a rise in 2019. Within seeds sales, the major revenue was driven from hybrid corn seeds, followed by wheat seeds.

Fuzzy and cotton seeds and sale of paddy occupied third and fourth spot in terms of revenue contribution. Third party cultivation controlled DAAG’s cost which inched up by 13.97 percent year-on-year and culminated into 12.53 percent year-on-year growth in gross profit in 2019. GP margin clocked in at 20.70 percent in 2019 versus GP margin of 21 percent recorded in 2018.

Higher payroll expense due to inflation as well as fresh inductions and higher utility expenses pushed the administrative expense up by 26 percent year-on-year in 2019. Distribution expense inched down by 2.45 percent year-on-year in 2019 as the company didn’t record any doubtful debts, write-offs and commission on sale in 2019 unlike the previous year. Operating profit posted 5.97 percent year-on-year decline in 2019 with OP margin sliding down to 4.93 percent from OP margin of 5.96 percent registered in 2018. Finance cost grew by 12.20 percent year-on-year in 2019, however, it mainly comprised of WWF, WPPF and stock exchange fee as the company had no bank loans on its books until 2019. While profit before taxation was down by 8.36 percent year-on-year in 2019, deferred taxation resulted in 27.59 percent rise in the bottomline which clocked in at Rs.3.97 million in 2019 with NP margin of 2.67 percent versus NP margin 2.38 percent posted in 2018. EPS grew to Rs.0.99 in 2019 versus EPS of Rs.0.78 posted in the previous year.

In 2020, DAAG’s sales plunged by 1 percent year-on-year to clock in at Rs.146.88 million. The outburst of COVID-19 at the end of 2020 put economic activities at a halt and exerted pressure on the demand of hybrid seeds. During 2020, the sales proceeds from fuzzy and cotton seeds, Okra and micronutrients posted a massive decline. Sale of paddy, Lint and Vanda also slightly tumbled. Conversely, the revenue from delinting increased during the year. Cost of sales dropped by 3.43 percent year-on-year in 2020, resulting in 8 percent year-on-year rise in gross profit. GP margin also climbed up to 22.6 percent in 2020.

Administrative expenses grew by 8.97 percent year-on-year in 2020 due to higher salaries and wages as well as provision for loss allowance booked during the year. Conversely, distribution expense dropped by 9 percent year-on-year due to lesser advertisement and sales promotion expense incurred in 2020. Operating profit multiplied by 30.92 percent year-on-year in 2020 with OP margin improving to 6.5 percent. Finance cost grew by 11.62 percent year-on-year in 2020 due to higher provisioning done for WWF and WPPF. Net profit grew by 47 percent year-on-year in 2020 to clock in at Rs.5.84 million with NP margin of 3.97 percent. EPS inched up to Rs.1.46 in 2020.

In 2021, DAAG posted 30.47 percent year-on-year growth in its topline which clocked in at Rs.191.63 million. This came on the back of improved demand as well as prices. International seeds market also showed recovery in 2021. The company’s annual production increased by 84 percent year-on-year in 2021 to clock in at 1,569 M Tons seeds. Third party processed seeds; however, posted 31 percent drop to clock in at 1,910 M tons.

Cost of sales grew by 34.19 percent year-on-year mainly on account of higher prices of seeds, chemicals as well as fuel and power. Research and development expenses also grew during 2021 as the company continuously strived to introduce new varieties of seeds to boost agricultural output within the country. Gross profit increased by 17.70 percent year-on-year in 2021, however, GP margin slumped to 20.40 percent. Administrative expenses grew by only 3.73 percent year-on-year as the company considerably reduced provision for loss allowance in 2021 which offset higher payroll expense incurred during the year. Distribution expense grew by 11.14 percent year-on-year in 2021 due to higher payroll expense, repair and maintenance charges as well as freight and octroi charges incurred during the year. Operating profit grew by 40 percent year-on-year in 2021 and OP margin also jumped up to 7 percent. Finance cost inched up by a mere 1.26 percent in 2021 primarily on account of higher provisioning done for WWF and WPPF. All these factors culminated into 37.78 percent year-on-year rise in net profit which clocked in at Rs.8.04 million in 2021 with NP margin of 4.2 percent. EPS clocked in at Rs.2.01 in 2021.

In 2022, DAAG registered 5.74 percent year-on-year improvement in its topline which clocked in at Rs.202.62 million. While sale of services i.e. seed processing as well as cleaning and drying posted considerable growth of 42 percent during the year, sale of seeds grew by less than 1 percent in 2022. As of 2022, sale of services had 16 percent contribution in the overall sales mix of DAAG.

During 2022, DAAG produced 3,679 M tons of seeds, up 5.7 percent year-on-year. Cost of sales grew by 1.43 percent year-on-year in 2022. Gross profit strengthened by 22.56 percent year-on-year translating into GP margin of 23.6 percent in 2022. Administrative expense grew by 6.87 percent year-on-year in 2022 due to higher payroll expense as well as write-off of bad debts during the year. Distribution expense posted 20.65 percent year-on-year rise in 2022 due to higher vehicle running expense as fuel charges profoundly increased during the year. Operating profit grew by 49.2 percent year-on-year in 2022 and OP margin surged to 9.89 percent. Finance cost escalated by 25.79 percent year-on-year in 2022 due to higher provisioning for WPPF. Profit before taxation grew by 51.39 percent year-on-year in 2022; however, the payment of deferred taxation resulted in 66.7 percent shrinkage in net profit which stood at Rs.2.68 million in 2022 with NP margin of 1.32 percent – the lowest among all the years under consideration. EPS also dwindled to Rs.0.67 in 2022.

Monsoon rains ruined the agricultural infrastructure in the southern region of the country and significantly affected the purchasing power of farmers. However, demand recovery towards the end of the financial year enabled DAAG to post 7.67 percent year-on-year rise in its net sales in 2023. DAAG’s net sales were recorded at Rs. 218.17 million in 2023. Sale of hybrid corn seeds continued to be the star product of the company contributing over 47 percent to the overall sales mix in 2023. Third party cultivation enabled the company to reduce its cost which grew by 5.34 percent in 2023. As a consequence, gross profit built up by 15.22 percent in 2023 with GP margin attaining a new high level of 25.28 percent.

Administrative expense multiplied by 13.50 percent year-on-year in 2023 mainly on account of higher payroll expense due to inflationary pressure. Distribution expense inched up by only 2.77 percent in 2023 due to lower payroll expense as well as curtailed vehicle running and advertisement expense incurred during the year. DAAG’s operating profit rose by 11.19 percent year-on-year in 2023 with OP margin climbing up to 10.21 percent. Finance cost surged by 316.77 percent in 2023 as the company acquired running finances to meet its working capital requirements during the year. Until last year, the company had no external borrowings on its books. While the company posted 12.61 percent year-on-year decline in profit before tax in 2023, deferred taxation resulted in tax credit of Rs.0.58 million in 2023. As a consequence, net profit registered 582 percent year-on-year growth to clock in at Rs.16.82 million in 2023 with EPS of Rs.4.21 and NP margin of 7.71 percent.

Better farm economics and improved agricultural output enhanced the purchasing power of farmers during the year. This resulted in 67 percent year-on-year improvement in the net sales of DAAG which clocked in at Rs.362.31 million. Robust net sales were the result of improved off-take of wheat seed, paddy seeds and sesame seeds. Seed processing/delinting was recorded at 3774 tons in 2024, up 14.19 percent year-on-year. Cost of sales grew by 65.11 percent in 2024 due to higher prices of raw materials. However, better sales mix and improved prices resulted in 68.91 percent escalation in gross profit with GP margin recorded at 25.72 percent – the highest during the period under consideration. Administrative expense surged by 16.30 percent during 2024 on account of higher payroll expense which was in line with inflation.

Distribution expense also escalated by 53.73 percent in 2024 due to higher salaries of sales force, elevated freight charges as well as hefty vehicle running expense incurred during the year. 650.73 percent improvement in other income in 2024 is the result of gain recognized on the disposal of fixed assets during the year. DAAG posted 142.28 percent higher operating profit in 2024 with OP margin clocking in at 14.89 percent. Finance cost mounted by 686.75 percent in 2024 due to increased short-term loans obtained during the period coupled with higher discount rate. High finance cost marred the bottomline which dwindled by 55.49 percent to clock in at Rs.7.487 million in 2024. This translated into EPS of Rs.1.87 and NP margin of 2 percent.

In 2025, DAAG’s net sales dipped by 2.51 percent to clock in at Rs.353.21 million. Massive reduction in the prices of wheat crop from Rs.3900 per maund to Rs.2400 per maund took its toll on the purchasing power of farmers and the overall liquidity of the sector. Due to delayed rainfall, the yield of hybrid rice also drastically shrank. This caused sheer uncertainty in the agriculture sector, leaving farmers with no liquidity to purchase corn seeds. The primary cause of thin revenues in 2025 was a massive plunge in services revenue which included seed processing, cleaning and drying. Cost of sales continued to mount to the tune of 10.68 percent in 2025 due to elevated raw material prices. This resulted in 40.62 percent decline in gross profit in 2025 with GP margin drastically falling down to 15.66 percent. Administrative expense surged by 13.50 percent while distribution expense ticked up by 4.65 percent in 2025 due to higher salaries and vehicle running expense. Other expense tamed by 29.26 percent in 2025 on account of no provisioning done for WWF and WPPF. Other expense was completely offset by 22 percent stronger other income recorded in 2025 on the back of greater gain recognized on the disposal of fixed assets. Higher operating expense pushed down operating profit by 76.80 percent in 2025 with OP margin receding to 3.54 percent. Finance cost dipped by 12.68 percent in 2025 due to monetary easing. This was despite higher outstanding borrowings at the end of the year. DAAG posted net loss of Rs.24.695 million in 2025 with loss per share of Rs.6.17.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, DAAG registered 8.19 percent year-on-year uptick in its net sales which clocked in at Rs.283.091 million. This was due to uptick in sales volume and prices as well as launch of new hybrid seed varieties. Cost of sales ticked up by 2.95 percent in 9MFY26. The optimization of sales mix resulted in 84.27 percent stronger gross profit in 9MFY26 with GP margin clocking in at 11 percent versus GP margin of 6.45 percent recorded in 9MFY25. Administrative expense plunged by 19.45 percent in 9MFY26 likely due to lower payroll expense on the back of workforce rationalization. Distribution expense surged by 8.90 percent in 9MFY26 seemingly due to higher freight charges and elevated salaries of sales force. DAAG registered operating profit of Rs.1.325 million in 9MFY26 versus operating loss of Rs.14.55 million recorded in 9MFY25. OP margin was recorded at 0.47 percent in 9MFY26. Finance cost shrank by 16.80 percent in 9MFY26 due to monetary easing. This was despite higher short-term loan obtained during the period. DAAG recorded net loss of Rs.24.428 million in 9MFY256, down 50.29 percent year-on-year. This translated into loss per share of Rs.6.11 in 9MFY26 versus loss per share of Rs.12.29 recorded in 9MFY25.

Future Outlook

DAAG has invested in new seed varieties of cotton, corn and wheat besides tapping the vegetables seeds market. This will improve the core income of the company. Furthermore, delinting and processing of seeds for third parties will add to other income of the company. Third party seed cultivation will continue to keep the cost in check. All these factors signal robust financial performance in future.

The real story of May inflation rests with the sharp spike in core inflation – that rose to 9 percent in urban settings, highest since September 2024. The fiscal year to date inflation at 6.7 percent is now inching closer to the upper band of the central bank’s medium-term inflation target.

Perishables nearly wiped all the increase in non-perishable on a month-on-month basis, led by a sharp decline in tomato and fresh vegetables prices that slid 43 percent and 25 percent, month-on-month.

While tomatoes’ decrease was still in line with historical directional change, fresh vegetables recorded the sharpest month-on-month fall in 42 months. Combined with over 2 percent weight in overall CPI basket, the impact was felt across.

Housing and transport indices were well in line with expectations, as lower adjustment for the month led to a moderate decline in electricity charges, whereas motor fuel increase was contained especially towards the latter half of the month.

Electricity tariffs were up 36 percent year-on-year, and the average national domestic tariff now stands close toRs27/unit.With higher fuel price adjustment lined up for June, an increase close to 5 percent month-on-month is on the cards in lieu of electricity tariffs.transport sub-index, is subject to greater risks given the geopolitical uncertainty.

But given the recent encouraging signs on the war front, the month-on-month price change has more chances of being on the lower side. Given that much of the headline inflation has been moved by transport fuel prices, this should keep transport inflation checked, all things constant.

That being said, the real story is slowly building around core inflation, where prices of non—food non-energy essential household items have started to firm up. The signs were evident in the last two WPI readings, and readings for May, may well just be the start of what is in store in terms of core inflation.

Footwear in urban settings rose an unprecedented 29 percent month-on-month – comfortably the highest monthly increase ever recorded. With a considerable weight of 1.48 percent, the impact was significant.

Surprisingly, footwear prices in rural settings barely changed from a month ago, but it may well play catch up soon, at least directionally if not in terms of magnitude.

Similarly, detergents registered a 33-month high, as sings were emerging in the WPI a month earlier. Household equipment have also become pricier at a much faster pace month-on-month, as soaring transportation costs are trickling to second round of inflation, via pass through. Construction wage rates, too, increased at the highest month-on-month rate in three years.

All these point towards stickier prices going forward, even if energy related inflation cools off sooner. Core inflation is now well clear of the central bank’s medium-term target and that would make for an interesting input in the upcoming MPS.

More economic data has to arrive before the next MPS, but core inflation alone warrants a deeper look as to how entrenched and how anchored the prices are for the near future. With the news cycle warning of higher standard sales tax in the upcoming budget and an even bigger in electricity tariff structure, in case of cross subsidy becoming more targeted, the impact on inflation could keep the MPS decision makers on their toes.

There are even voices within the industry advocating a one-year delay in the policy. The argument is not entirely without merit. After years of contraction, the sector is finally recovering. Production is rising, investment is returning, and competition is delivering better products to consumers. There is a case for not disrupting a market that is beginning to function again.

The government’s challenge is more complicated. It must reduce tariffs in line with commitments under the National Tariff Policy and its broader reform agenda while simultaneously protecting revenue collection. The likely solution appears to be a reduction in customs duties and para-tariffs accompanied by new taxes and levies elsewhere in the system.

The debate is therefore no longer about whether duties will come down. It is about what will replace them.

Current proposals suggest customs duties on CKD kits could fall by around five percentage points. Duties on localized parts may decline from 46 percent to 41 percent, while those on non-localized parts could fall from 32 percent to 27 percent. On paper, that should lower production costs and eventually vehicle prices. In practice, however, the benefit may be neutralized through the introduction of a new environmental levy on internal combustion engine (ICE) vehicles, reportedly ranging between 5 and 15 percent, in addition to the proposed carbon levy.The result is that despite lower duties, most ICE vehicles are likely to become more expensive.

The treatment of New Energy Vehicles (NEVs) is even more important. While environmental levies are not expected to apply to EVs, duties on locally assembled EV components are proposed to rise sharply. Duties on localized EV parts may increase from 25 percent to 41 percent, while non-localized components could rise from 10 percent to 25 percent. With only a handful of EV models currently being assembled locally, these changes could raise prices by 10 to 15 percent and slow the development of a domestic EV manufacturing ecosystem before it has properly taken root.

Another battle is unfolding within the NEV category itself. Plug-in Hybrid Electric Vehicles (PHEVs) are caught between competing interests. Today, PHEVs enjoy a preferential GST regime of 8.5 to 12.5 percent. One proposal seeks to reduce this to 1 percent, bringing it closer to battery-electric and range-extended electric vehicles. That would be a sensible step if the objective is to accelerate adoption of cleaner technologies.

Others with greater exposure to conventional ICE vehicles and hybrids are reportedly pushing in the opposite direction. If GST on NEVs rises to 18 percent while duties on EV components also increase, the impact on prices could be substantial. Battery-electric and range-extended vehicles could become more than 30 percent more expensive, while PHEVs may face double-digit price increases. Under such a framework, the government’s target of achieving a 30 percent NEV share by 2030 would become increasingly difficult to achieve.

The situation is further complicated by the expiry of concessions on imported EVs. This is particularly problematic for companies that have committed to local assembly but whose plants are still months away from production. Penalizing them before localization begins risks slowing investment rather than encouraging it.

The broader concern is that virtually every proposed adjustment points toward higher vehicle prices. The only meaningful exception may be small cars below 800cc, where GST could be reduced to 12.5 percent without additional levies. Beyond that category, the direction of travel is clear: higher taxes and higher prices.

That outcome sits uneasily with another government objective—raising annual vehicle sales to 500,000 units by 2031. Higher taxes can increase revenues in the short term, but they also suppress demand and limit scale. The two objectives cannot be pursued independently.

There is also a deeper issue of mindset. Policymakers often treat automobiles as luxury goods that should be discouraged. The country’s annual vehicle import bill remains smaller than its edible oil import bill. One supports industrialization, engineering capabilities, vendor development, and employment. The other reflects a consumption necessity. If Pakistan is serious about building a manufacturing base, it cannot continue to view the automobile sector primarily through the lens of luxury consumption.

The government should support both localization and electrification. Reducing the gap between CBUs and locally assembled vehicles is acceptable if it pushes assemblers to become more efficient. Indeed, duties on imported vehicles are already set to fall significantly. But raising taxes on locally assembled NEVs at the same time would undermine one of the few segments where localization is only just beginning.

Ultimately, the debate should not be about protecting one lobby or another. The real objective is straight forward: encourage local manufacturing, accelerate the adoption of battery-powered vehicles, and keep vehicles affordable enough for the market to grow. Everything else is secondary. The country saves foreign exchange through lower fuel imports, consumers benefit from lower running costs, the power sector gains additional demand, and emissions decline. That is a rare alignment of economic, industrial, and environmental interests. Policymakers should not allow competing lobbies to obscure it.

The company is engaged in the manufacturing and sale of radiators, exhaust system, sheet metal components and other parts for automobile industry.

Pattern of Shareholding

As of June 30, 2025, LOADS have a total of 251.250 million shares outstanding which are held by 8273 shareholders. Local general public has the majority stake of around 38.33 percent in the company followed by Directors, CEO, their spouse and minor children holding around 37.80 percent shares.

Associated companies, undertakings and related parties account for 12.55 percent of the outstanding shares of LOADS. The remaining shares are held by other categories of shareholders.

Historical Performance (2019-25)

The topline of LOADS slid thrice during the period under consideration i.e. in 2020, 2023 and 2024. Its bottomline dropped until 2020 to record net loss during the year. In 2021 and 2022, LOADS’s bottomline recovered from net loss and registered growth. LOADS posted net loss yet again in 2023 followed by net profit in 2024. In 2025, net profit thinned down.

The gross margin of the company hit its lowest level in 2020 and maxed out in 2025. Conversely, its operating and net margins touched their lowest level in 2023 and then peaked in 2024. In 2025, LOADS’s operating margin stayed intact while its net margin plunged (see the graph of profitability ratios).

The detailed performance review of the period under consideration is given below.

In 2019, LOADs’s topline recorded year-on-year growth of 16.77 percent to clock in at Rs.5709.74 million. This came on the back of upward price revision to justify depreciation of Pak Rupee. Moreover, the topline growth was also the result of addition of converters in Suzuki products and hefty growth in Toyota Corolla sales.

Gross profit jumped up by 39 percent year-on-year in 2019 with GP margin clocking in at 9.1 percent versus GP margin of 7.64 percent recorded in 2018. Operating expense rose by 5.43 percent year-on-year in 2019 due to inflationary pressure.

Conversely, other expense gave a breather and plunged by 22.67 percent year-on-year in 2019 due to high-base effect as the company recorded loss on sale of investment in Pakistan Investment Bonds in 2018. Other income almost remained intact in 2019.

Operating profit boasted a stunning year-on-year growth of 60.47 percent in 2019 with OP margin clocking in at 6.66 percent versus OP margin of 4.85 percent posted in 2018.

Finance cost mounted by 124.43 percent year-on-year in 2019 on account of higher discount rate coupled with increase in short-term financing facilities availed during the year. This coupled with minimum tax on turnover culminated into bottomline plunge of 48.70 percent year-on-year to clock in at Rs.41.22 million in 2019. This translated into EPS of Rs.0.27 in 2019 versus EPS of Rs.0.53 recorded in the previous year. NP margin also narrowed down to 0.72 percent in 2019 versus NP margin of 1.64 percent recorded in 2018.

In 2020, COVID-19 struck and the automobile sales crashed by 53 percent year-on-year. This produced a direct impact on the sales of LOADS which tapered off by 51.34 percent year-on-year to clock in at Rs.2778.63 million in 2020. Low off-take across the categories also produced a downward effect on the cost of sales.

Gross profit thinned down by 61.85 percent year-on-year in 2020 with GP margin clocking in at 7.13 percent. Low outward freight, vehicle running and travelling cost, advertising and sales promotion as well as employee benefits squeezed the operating expense by 4.4 percent year-on-year in 2020.

Other expense posted a drastic 87.57 percent year-on-year drop as the company didn’t book any provision for WWF and WPPF during the year. Other income multiplied by 126.67 percent during the year as the company recognized markup income on loans to its subsidiaries.

Despite cost curtailment and a check on operating expense, operating profit shrank by 56.47 percent year-on-year in 2020 with OP margin of 5.96 percent. To top it off, finance cost grew by 45.70 percent year-on-year in 2020 due to discount rate hike in the first three quarters of 2020 coupled with long-term loans facilities availed by the company from commercial banks and ORIX leasing Pakistan Limited to manage its cash flow and working capital requirements.

LOADS also availed SBP refinance scheme in 2020 for the payment of wages and salaries. This put further dent on the bottomline which posted net loss of Rs.137.33 million in 2020. Loss per share clocked in at Rs.0.91 in 2020.

In 2021, the signs of COVID-19 began to melt away with a significant reduction in discount rate which spurred auto financing.

The automobile sector registered a boom of 62 percent year-on-year in 2021. This resulted in growth of 69.77 percent year-on-year in the topline of LOADS which clocked in at Rs.4717.23 million in 2021. Pak Rupee depreciation took its toll on the cost of raw materials consumed during the year.

Moreover, toll manufacturing, utility charges, salaries and wages etc also soared which drove the cost of sales up by 67.40 percent year-on-year in 2021.

Gross profit grew by 100.62 percent in 2021 which resulted in GP margin ticking up to 8.42 percent. Rise in advertisement and promotion budget as well as outward freight raised the operating expense by 4 percent year-on-year.

The impairment loss on trade receivables booked by LOADS in 2020 was reversed in 2021 due to recovery of outstanding receivables as the economy began to show signs of recovery. Other expense recorded a hefty rise of 297.34 percent in 2021 on the back of higher provisioning done for WWF and WPPF.

Other income also recorded a rise of 15.49 percent in 2021 on the back of exchange gain, gain on disposal of fixed assets and reversal of provisions against inventory. Operating profit posted a staggering year-on-year rise of 140.45 percent in 2021 with OP margin clocking in at 8.4 percent – almost the same as GP margin for the year.

Finance cost contracted by 37.94 percent year-on-year in 2021 due to downward revision in discount rate coupled with a drop in the outstanding loan portfolio of LOADS. The bottomline recorded net profit of Rs.123.88 million in 2021 with EPS of Rs.0.62. NP margin stood at 2.63 percent in 2021.

In 2022, the boom of automobile industry continued whereby it registered a volumetric growth of 53 percent over previous year. This also provided impetus to the sales of LOADS which posted growth of 65.18 percent year-on-year to clock in at Rs.7791.96 million in 2022. Soaring inflation as well as Pak Rupee depreciation pumped up the cost of sales by 61.60 percent in 2022.

Moreover, high toll manufacturing charges, salaries and wages as well as other employee benefits also played their part in escalating the cost of sales.

However, upward price revisions and handsome volumes drove gross profit up by 104.11 percent in 2022 with GP margin clocking in at 10.41 percent.

While operating expense posted a momentous growth of 40.82 percent in 2022, it was counterbalanced by a stunning growth in other income on account of markup earned on loans to subsidiaries.

Operating profit boasted a growth of 114.15 percent in 2022 with OP margin of 10.94 percent, even higher than the GP margin recorded during the year – thanks to other income. Finance cost mounted by 70.51 percent in 2022 on the back of higher discount rate coupled with increased borrowings during the year.

Bottomline grew by 115.67 percent in 2022 to clock in at Rs.267.17 million in 2022 with EPS of Rs.1.06. NP margin stood at 3.43 percent in 2022.

In 2023, LOADs’s topline shrank by 42.33 percent to clock in at Rs.4493.83 million. This was the result of slowdown in the auto industry on the back of high financing rates, low purchasing power of consumers and import restrictions imposed by the Central Bank.

Cost of sales slid by 46.13 percent in 2023, resulting in 9.62 percent plunge in gross profit in absolute terms.

However, GP margin greatly improved during the year to clock in at 16.31 percent. Operating expense remained intact at the last year’s level owing to cost control measures put in place by the company.

One such measure was the downsizing of its workforce from 733 employees in 2022 to 382 employees in 2023 which greatly curtailed the payroll expense. No profit related provisioning done during the year resulted in 82.94 percent decline in other expense in 2023.

Other income strengthened by 68.42 percent in 2023 due to higher mark-up income recognized on loans to subsidiaries and greater gain recorded on the disposal of property, plant and equipment during the year.

The major downbeat factor which resulted in operating loss in 2023 was the booking of provision for impairment in equity investment and mark-up recoverable from its associated company, Hi-Tech Alloy Wheels Limited (HAWL) to the tune of Rs.859 million and ECL against loan to HAWL to the tune of Rs.1345 million respectively. This was due to delay in the commissioning of its operations due to downturn of the auto industry. As a consequence, LOADS posted operating loss of Rs.1173.85 million in 2023.

Finance cost also surged by 56.91 percent in 2023 due to high discount rate. Net loss clocked in at Rs.1255.67 million in 2023 with loss per share of Rs.5.

In 2024, LOADS’s topline remained intact at the last year level of Rs.4.49 billion. The slump in auto industry sales continued to take its toll the volumes of LOADS in 2024.

On the positive note, the appreciation in the value of local currency reduced the cost of sales by 3.96 percent in 2024, resulting in 19.87 percent improvement in gross profit in absolute terms. GP margin also attained an unprecedented level of 19.56 percent in 2024.

The company kept a check on its operating expense which dipped by 1.20 percent in 2024. ECL against loan to subsidiary company, HAWL also increased by 12.98 percent in 2024. Other expense mounted by 456.82 percent in 2024 due to higher provisioning booked for WWF and WPPF.

However, operating expense and other expense were offset by a staggering 221.69 percent rise in other income recorded during the year. This was primarily the result of gain on disposal of Korangi land and building coupled with mark-up income recorded on loans to subsidiaries.

LOADS posted operating profit of Rs.884.28 million in 2024 with OP margin of 19.69 percent. Finance cost ticked up by 4.89 percent in 2024.

The outstanding liabilities of LOADS greatly reduced during the year resulting in gearing ratio of 29 percent in 2024 versus gearing ratio of 44 percent recorded in the previous year. The company posted net profit of Rs.826.59 million in 2024 with EPS of Rs.3.29 and NP margin of 18.41 percent.

In 2025, LOADS’s net sales strengthened by 34.35 percent to clock in at Rs.6032.90 million. This came on the back of robust demand from OEM which is reflective of the recovery of automobile sector during the year.

Exhaust systems make up the biggest chunk of LOADS’s sales and posted year-on-year growth of 40 percent to clock in at Rs.3705 million in 2025. This was followed by sheet metal component sales which grew by 22 percent to clock in at Rs.2096 million and radiator sales which grew by 78 percent to clock in at Rs.231 million in 2025.

Cost of sales grew by 30 percent in 2025. Stronger exchange rate and lower inflation enabled the company to control in cost and recorded 52.27 percent stronger gross profit in 2025. GP margin attained its optimum level of 22.17 percent in 2025.

Operating expense surged by 32 percent in 2025 mainly on the back of higher payroll expense, outward freight expense, legal & professional charges as well as advertising & sales promotion expense incurred during the year.

ECL against loan to subsidiary (HAWL) dipped by 64.73 percent in 2025. Increased profit related provisioning resulted in 83.63 percent surge in other expense in 2025. Other income deteriorated by 56.54 percent in 2025, however was huge enough to counterbalance operating and other expense entirely.

The deterioration in other income was the result of lower mark-up income on loans to subsidiaries. LOADS recorded 34.61 percent higher operating profit in 2025 with OP margin staying largely intact at the last year level of 19.70 percent. Finance cost slid by 37.32 percent in 2025 due to monetary easing and lesser outstanding borrowings.

Despite all these factors, LOADS’s net profit deteriorated by 40 percent to clock in at Rs.495.22 million in 2025. This was not due to operational inefficiency but due to high-base effect as the company recognized deferred tax asset on a higher amount of ECL on principal amount of loan recoverable from HAWL as per the requirements of IFRS. EPS was recorded at Rs.1.97 while NP margin tumbled to 8.21 percent in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, LOADS recorded 30.17 percent year-on-year improvement in its topline which clocked in at Rs.5657.66 million. While local sales were the main growth propeller, the company also registered export sales to the tune of Rs.6.02 million in 9MFY26.

Robust local sales came on the back of increased demand from OEMs due to the revival of automobile sector. Sale of exhaust systems, sheet metal components and radiators grew by 29 percent, 30 percent and 54 percent respectively in 9MFY26.

Sales mix optimization, stable exchange rate and higher absorption of fixed cost due to superior capacity utilization resulted in 27.82 percent improvement in gross profit in 9MFY26 with GP margin staying largely intact at around 21 percent. Augmented production operations and sales volume pushed up operating expense by 42.27 percent in 9MFY26.

ECL against mark-up receivable from HAWK dipped by 30.70 percent in 9MFY26. Other expense escalated by 24.57 percent in 9MFY26 likely due to increased provisioning done for WWF and WPPF.

Other expense was completely offset by other income of Rs.345.15 million recognized in 9MFY26, resulting in net other income of Rs.298.14 million, down 40.55 percent year-on-year. The decline in net other income in 9MFY26 was due to massive decline in gain on sale of property, plant and equipment, lesser mark-up income on loan to subsidiaries and lesser unrealized gain on the re-measurement of investments in 9MFY26.

LOADS’s operating profit ticked up by 11.37 percent in 9MFY26 with OP margin clocking in at 15.24 percent versus OP margin of 17.81 percent recorded in 9MFY25. Finance cost ticked down by 11.86 percent in 9MFY26 due to monetary easing. This was despite massive increase in external short-term borrowings during the period.

Net profit multiplied by 33.33 percent to clock in at Rs.380.945 million in 9MFY26. This translated into EPS of Rs.1.40 and NP margin of 6.73 percent in 9MFY26 versus EPS of Rs.1.06 and NP margin of 6.57 percent registered in 9MFY25.

Future Outlook

Enrichment of auto industry on the back of improvement in investor sentiment, introduction of new models and variants and growing vehicle base augur well for LOADS’s volumes. Lately, stability of Pak Rupee, declining interest rate as well as downtick in inflation also provided considerable support to the local industry and buttressed LOADS’s volumes.

On the flipside, the permission for the commercial import of up to five year old vehicles tends to hurt the local automobile industry as well as ancillary industries which have endured a sustained period of thin volumes and under-utilization of their capacities.

Moreover, regional tensions may suppress the local currency by inflating the energy import bill, driving up inflation and reversing the monetary easing cycle. This may also hurt the local automobile industry. To counter this risk, LOADS in efficiently building its room in after market and strengthening its foothold in the export market.

For the past few months, the government kept showing them all carrots. However, the way things are culminating, there may not be much in the offing. The budget numbers — the bottom lines — are already being decided with the IMF, and the debate is now about how to achieve them.

The IMF is showing no leniency despite rising global oil prices, and to meet the numbers, the government may have to forgo most of its promises to the business community and salaried individuals.

That is the story. Overall economic growth is likely to slow down. Next year’s GDP growth may be lower than this year’s provisional number of 3.7 percent. Large-scale manufacturing is going to take a hit, which will have a negative impact on taxation. Interest rates are also rising again, which will push up debt servicing costs.

The reliance on taxation through the petroleum levy is likely to increase at a time when oil prices are rising. The federal government’s yield from the petroleum levy is 2.5 times higher than what it gets from taxes collected by the FBR. For instance, for every Rs100 collected by the FBR, the federal government gets only around Rs40, while in the case of the petroleum levy, the full Rs100 is retained by it.

Thus, petroleum prices are likely to remain high, keeping inflation elevated amid low growth. The salaried class may get some small actual relief — and much more relief in government advertisements. There may be some reduction in tax liability for low- to middle-income groups, while higher salary brackets may get some relief through a reduction in the tax surcharge.

Similarly, the corporate sector may get some token reduction in super tax, but it may not get what it wants in terms of easing intercorporate dividend taxation, relaxation in minimum taxes, and other demands. Formal businesses and export-oriented firms are therefore likely to continue facing a disadvantage.

Traders will remain the blue-eyed boys, while real estate players may get some relief — as they already have in the form of changes to Section 7E. The government is now returning to the old formula of trying to generate growth through a real estate pump. The eventual dump could come in the form of another balance of payments crisis. But it appears the government is losing patience.

A big hit may be coming for domestic power consumers using 200 units or less. The government is likely to end cross-subsidies for them, and they may face a sharp increase in bills amid rising fuel cost adjustments. The benefit may not be passed on to those who are currently subsidizing them; instead, it may be used to lower power sector subsidies.

This could bring a new round of inflation and more clamor. But more of the same is likely to continue.

This space has been vocal about the risks of overtaxing the formal juice industry. Earlier, it argued that FED was delaying pulp localization, weakening the farm-to-factory value chain, pushing demand toward informal products, and shrinking the domestic scale needed for exports.

The issue is not protection for one industry. It is about correcting a tax measure that has begun to hurt an emerging agriculture value chain. Pakistan needs to reduce fruit wastage and convert raw produce into higher-value products.

The formal packaged juice industry can help by creating demand for fruit pulp, supporting local processing, and linking farmers, pulp producers, brands, and export markets. High FED has disrupted that progress.

The Policy Research Institute of Market Economy, or PRIME, has called the current FED structure a self-defeating policy. Its point is simple: the government raised tax rates to collect more revenue, but the higher burden narrowed the formal taxable base.

After 20 percent FED was imposed on packaged juices in Budget 2023-24, on top of 18 percent sales tax, sector sales reportedly fell by around 45 percent to Rs42 billion against expectations of over Rs72 billion. Volumes dropped to levels last seen in 2017, wiping out years of expansion in one stroke.

The Fruit Juice Council’s numbers tell the same story. It says the 20 percent FED, along with 18 percent GST, has taken the cumulative tax burden on packaged juices to nearly 42 percent.

Since FED was imposed, industry volumes have declined by over 45 percent, while the market has shrunk from nearly Rs60 billion in 2021-22 to around Rs40 billion in 2025.

Consumption, according to the council, has fallen back to 2017 levels. This shows that the problem is not merely lower sales. The tax has made formal packaged juices less affordable and pushed consumers toward cheaper, undocumented alternatives.

This is the Laffer Curve in practice. Beyond a point, higher tax rates do not raise revenue. They reduce sales, shrink the formal market, and weaken future collection. The state may have increased the rate, but it damaged the base on which that tax was supposed to be collected.

Pakistan’s own experience with juice taxation makes the point clearer. When 5 percent FED was imposed on fruit drinks in FY19, formal juice sales fell from Rs53 billion to Rs41 billion in FY20. When it was removed, the market recovered to Rs59 billion by FY22, while GST collection also improved and almost covered the loss from FED.

PRIME also notes that the removal of FED helped revive sales, create jobs, and reduce value-chain losses.

There is another concern too: food safety and compliance. The Fruit Juice Council argues that the contraction of the documented industry has increased the market share of undocumented players, many of whom operate outside regulatory and food safety standards. That makes this more than an industry concern.

A tax policy that makes regulated products less affordable can end up weakening consumer protection, compliance, and long-term revenue generation.

The agriculture spillover is just as important. Pakistan loses over 30 percent of many agriculture products after harvest. A stronger pulp market can absorb part of that fruit and improve the farm-to-market supply chain. But the pulp market needs steady domestic demand, and that demand comes from the juice industry.

PRIME notes that packaged juice companies sourced only 20,223 tons of mangoes in FY24, down from 31,000 tons in FY18. That decline affects not just manufacturers, but farmers, pulp processors, and the wider rural economy.

This is also why juices and carbonated drinks should not be put in the same tax basket. Fruit drinks, nectars, and pure juices have mandatory fruit-content requirements, with pure juices containing up to 100 percent fruit content. These products are linked to local fruit procurement, pulp processing, and rural supply chains. Carbonated drinks, by contrast, are largely flavoured beverages with limited connection to agriculture.

Treating the two categories alike ignores both their nutritional difference and their very different economic linkages.

High taxation also hurts investment. When domestic sales shrink, companies delay spending on processing capacity, product development, technology upgrades, and export readiness. This matters because fruit juices have export potential but need scale at home first.

Without a healthy domestic base, firms cannot invest in better shelf life, R&D and international market standards.

This is why reducing or abolishing FED should be seen as a strategic correction. It can revive formal sales, support pulp production, reduce fruit wastage, protect investment, and help the industry move toward exports. It can also support more sustainable revenue by expanding the formal base instead of overtaxing a shrinking one.

A practical compromise would be to reduce FED on existing juice variants and exempt the proposed no-added-sucrose or white-sugar category from FED altogether.

The Fruit Juice Council has proposed reducing FED on existing variants from 20 percent to 10 percent, while granting complete FED exemption to the new no-added-sucrose or white-sugar category. This would address the government’s health concern without destroying the formal juice market. It would also encourage reformulation, product innovation, and healthier choices within the documented sector.

The budget should not treat this as a favour to one industry. The better approach is to remove the extra FED layer, or at least bring it down sharply, while keeping the sector under the normal GST regime. That way, the government still collects tax, but without pushing the formal market further into decline.

Pattern of Shareholding

As of June 30, 2025, PPVC has a total of 14.972 million shares outstanding which are held by 580 shareholders. Foreign companies have the majority stake of 66.60 percent in the company followed by local general public accounting for 23.16 percent shares.

Banks, DFIs and NBFIs hold 3.71 percent shares of PPVC while joint stock companies hold 3.62 percent shares.

Around 2.83 percent of the company’s shares are held by its directors, CEO, their spouse and minor children. The remaining shares are held by other categories of shareholders.

Historical Performance (2020-24)

Except for year-on-year growth in 2021 and 2022, PPVC’s topline registered year-on-year decline over the period under consideration. The company couldn’t post gross profit in any of the years, however, posted operating profit in 2021, 2022 and 2023 – thanks to the robust other income.

PPVC recorded net profit only in 2023. The detailed performance review of the period under consideration is given below.

In 2020, PPVC’s topline slid by 37.95 percent to clock in at Rs.5.52 million. This was on account of COVID-19 which resulted in halted production activities. During the year, the company’s Gharo plant remained closed while Islamabad plant also registered reduced production due to economic uncertainty and lower demand.

The production of PVC pipes at the Islamabad plant slumped by 49.43 percent to clock in at 114,004 meters in 2020.

The excess capacity of the plant was used to process mineral water which increased by 4.38 percent to clock in at 57,645 gallons in 2020. Cost of sales slid by a considerably lower magnitude of 13.67 percent in 2020 due to fixed overhead cost. This resulted in a paltry 0.25 percent decline registered in gross loss which stood at Rs.16.04 million in 2020.

Other income strengthened by 20.80 percent in 2020 due to higher rental income recognized during the year.

Distribution expense mounted by 15.17 percent in 2020 mainly on the back of higher donations distributed during the year. Administrative expense also surged by 16 percent in 2020 due to higher payroll expense as well as legal & professional charges incurred during the year. PPVC streamlined its workforce from 44 employees in 2019 to 30 employees in 2020.

Operating loss tapered off by 33.92 percent to clock in at Rs.4.61 million in 2020. Finance cost almost stayed intact at Rs.7.25 million during the year. PPVC’s current liabilities exceed its current assets by Rs.362.980 million as of June 30, 2020. Its accumulated loss stood at Rs.501.636 million.

Moreover, the company has not been able to obtain additional finances to stimulate its operations. Majority of the company’s loan is obtained from related parties and directors except for cash finance of Rs.15 million for which the bank has filed suit for recovery.

PPVC’s net loss shrank by 9.84 percent to clock in at Rs.15.76 million in 2020. This translated into loss per share of Rs.1.05 in 2020 versus loss per share of Rs.1.17 recorded in 2019.

In 2021, PPVC’s net sales strengthened by 74.79 percent to clock in at Rs.9.64 million. During the year, the production of PVC pipes at the Islamabad plant increased by 71.79 percent to clock in at 195,851 meters.

Mineral water processing dropped by 24.22 percent to clock in at 43,686 gallons in 2021. Cost of sales surged by 13.38 percent in 2021 mainly on account of higher cost of raw and packaging material consumed during the year coupled with elevated fuel & power charges. This resulted in gross loss of Rs.14.80 million in 2021, down 7.74 percent year-on-year.

Other income picked up by 14 percent in 2021 due to higher rental income recognized during the year. Distribution expense dwindled by 4 percent in 2021 due to lesser donations given out during the year.

Administrative expense also fell by 11 percent in 2021 due to considerably lower legal & professional charges incurred during the year. PPVC recorded operating profit of Rs.0.27 million in 2021 with OP margin of 2.77 percent.

Finance cost stayed intact during the year. During the year, the company’s current liabilities exceed its current assets by Rs.369.292 million. Its accumulated loss clocked in at Rs.508.459 million in 2021. PPVC recorded net loss of Rs.11.56 million in 2021, down 26.66 percent year-on-year. This translated into loss per share of Rs.0.77 in 2021.

In 2022, PPVC’s topline registered year-on-year growth of 24.98 percent to clock in at Rs.12.05 million.

The company produced 216,682 meters of PVC pipes in 2022, up 10.64 percent year-on-year. It also processed 49,050 gallons of water in 2022, up 12.28 percent year-on-year. Cost of sales ticked up by 8.88 percent in 2022. This resulted in 1.62 percent downtick recorded in gross loss which stood at Rs.14.56 million in 2022. Other income improved by 14.71 percent in 2022 due to higher rental income.

Elevated donations, vehicle running expenses as well as salaries of sales force translated into 25.55 percent growth recorded in distribution expense in 2022. Administrative expense also surged by 14 percent in 2022 due to higher payroll expense as well as legal & professional charges incurred during the year.

PPVC hired new employees to expand its workforce from 37 employees in 2021 to 43 employees in 2022. The company recorded operating profit of Rs.2.37 million in 2022, up 788 percent year-on-year.

This translated into OP margin of 19.65 percent in 2022. Finance cost clocked in at Rs.7.25 million in 2022, almost same as last year.

PPVC’s current liabilities exceed its current assets by Rs.374.632 million as of June 30, 2022. Accumulated loss at the end of the year was recorded at Rs.514.479 million. The company recorded net loss of Rs.10.28 million in 2022, down 11 percent year-on-year. This resulted in loss per share of Rs.0.69 in 2022.

PPVC recorded topline slide of 6.62 percent in 2023. Its net sales were recorded at Rs.11.25 million in 2023. The production volume of PVC pipes increased by 32.90 percent to clock in at 287,973 meters in 2023. Similarly, mineral water processing also increased by 1.70 percent to clock in at 49,884 gallons.

Sales volume also rose accordingly; however, the company couldn’t increase the prices because of thinner demand and stiff competition. This resulted in 35.41 percent spike recorded in the company’s gross loss which clocked in at Rs.19.71 million in 2023. What turned the tables for PPVC in 2023 was 404.13 percent year-on-year growth recorded in the company’s other income.

This was the result of mark-up reversed against bank settlement. During the year, the company made out of court settlement with the external lender (UBL Bank). Under the agreement, it was decided that if the company pays the principal amount before December 28, 2022, the bank will waive the accrued mark-up of Rs.106.964 million.

Distribution expense escalated by 16.34 percent in 2023 due to higher donation, vehicle running expense and salaries of sales force incurred during the year. Administrative expense recorded 17 percent spike in 2023 due to higher payroll expense, legal & professional charges as well as utility charges incurred during the year.

The company squeezed its workforce to 41 employees in 2023. Due to one-off boost recorded in other income, PPVC posted operating profit of Rs.104.22 million in 2023, up 4301.27 percent year-on-year. This translated into OP margin of 926.34 percent in 2023. Finance cost fell by 49.77 percent in 2023 as the company discharged its external short-term liability worth Rs.15 million pertaining to UBL bank.

At the end of the year, PPVC’s current liabilities exceeded its current assets by Rs.270.050 million. Accumulated loss was recorded at Rs.410.490 million in 2023. PPVC was able to post net profit of Rs.88.714 million in 2023. This translated into EPS of Rs.5.93 and NP margin of 788.50 percent.

In 2024, PPVC’s net sales declined by 22 percent to clock in at Rs.8.77 million. During the year, the production of both PVC pipes and mineral water declined to clock in at 133,462 meters and 41,200 gallons respectively. Cost of sales continued to mount to the tune of 6.26 percent in 2024. This was due to fixed overhead charges incurred during the year.

Gross loss magnified by 22.42 percent to clock in at Rs.24.13 million in 2024. Other income dipped by 76 percent due to one off mark-up reversal against bank settlement recorded in the previous year. Distribution expense recorded 19.96 percent hike in 2024 due to elevated vehicle running expense and salaries of sales force incurred during the year.

Administrative expense also surged by 13.48 percent in 2024 due to increased utility charges and payroll expense incurred during the year. Number of employees stayed intact at 41 in 2024. PPVC recorded operating loss of Rs.5.21 million in 2024. This was after three years that the company was unable to post any operating profit. Finance cost largely stayed at the last year level. Current liabilities exceed current assets by Rs. 279.588 million as of June 30, 2024. Accumulated loss at the end of 2024 was recorded at Rs. 420.320 million. The company posted net loss of Rs.4.823 million in 2024 with loss per share of Rs.0.32.

In 2025, PPVC’s net sales tapered off by 23.19 percent to clock in at Rs.6.74 million. Gharo plant remained closed during the year due to unavailability of funds from financial institutions and discontinuation of electricity by K-Electric. The company had planned to shift the pipe plant machinery from Gharo to Islamabad plant; however, it was delayed due to liquidity constraints.

In 2025, the production of PVC pipes tumbled by 51.75 percent to clock in at 64,394 meters. Conversely, water processing operations increased by 46.84 percent to clock in at 60,500 gallons in 2025.

Idle plant capacity resulted in lesser absorption of fixed cost during the year. This translated into 3.25 percent uptick recorded in cost of sales in 2025 with gross loss mounting by 12.85 percent to clock in at Rs.27.23 million.

Other income strengthened by 21 percent in 2025 due to higher rental income recognized during the year. Distribution expense posted 5.58 percent uptick in 2025 due to increased salaries of sales force as well as vehicle running expense incurred during the year.

Administrative expense mounted by 19.40 percent in 2025 due to higher payroll expense, utility expense, rent, rates and taxes as well as allowance booked for ECL. The company rationalized its workforce from 41 employees in 2024 to 28 employees in 2025.

Operating loss tumbled by 38.12 percent to clock in at Rs.3.22 million in 2025. Finance cost clocked in at Rs.3.64 million in 2025 – almost intact at the last year level.

PPVC’s current liabilities exceed it current assets by Rs.280.361 million as of June 30, 2025. Accumulated loss at the end of the year was recorded at Rs.421.709 million with negative equity of Rs. 32.557 million.

PPVC recorded net loss of Rs.7.178 million in 2025, up 48.84 percent year-on-year. This translated into loss per share of Rs.0.48 in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, PPVC recorded a massive year-on-year decline of 49.93 percent in its net sales which clocked in at Rs.2.75 million. This was due to lower production and sale of PVC pipes during the period.

Curtailed demand and lack of financial facilities didn’t allow the company to continue its operations optimally. Gross loss ticked down by 4.57 percent to clock in at Rs.19.97 million in 9MFY26.

Distribution expense ticked up by 8.28 percent in 9MFY26 due to increased salaries of sales force and vehicle running expense.

Conversely, administrative expense tumbled by 4.79 percent in 9MFY26 due to workforce rationalization on the back of lesser operations. Rental income which forms the major proportion of PPVC’s other income also deteriorated during the period under review.

All these factors translated into 59.37 percent spike in the company operating loss which clocked in at Rs.6.15 million in 9MFY26. The entire amount of outstanding loan remained overdue and unpaid during the period. Finance cost increased by 2.44 percent due to bank charges.

PPVC registered 29.93 percent higher net loss to the tune of Rs.6.096 million in 9MFY26. This translated into loss per share of Rs.0.41 in 9MFY26 versus loss per share of Rs.0.31 recorded in 9MFY25.

Future Outlook

Gharo plant has been shut since 1995 and with negative equity and negative working capital; the company is not able to obtain external financing to revive its operations.

On the demand front, the onset of monetary tightening and the possible currency depreciation may further strain the construction activity in the country which will take its toll on the demand of PVC pipes.

By the end of 10MFY26, Pakistan’s cumulative solar panel imports had reached 54,711MW, quietly surpassing the country’s entire grid-based installed power capacity from just a year ago. The sheer scale is staggering for a market that, until recently, was still being treated as a fringe energy alternative.

The frenzy, however, has cooled.

Solar panel imports during 10MFY26 stood close to 7,600MW, nearly half the 14,500MW imported during the same period last year. On the surface, that may look like a sharp slowdown. In reality, it resembles the natural transition from hypergrowth to consolidation.

The base is now massive. Rooftops across urban Pakistan have already been saturated by early adopters, industrial users, commercial consumers, and households desperate to escape ever-rising grid tariffs. The exponential curve was never going to sustain indefinitely. But the direction of travel remains unchanged.

Solar is no longer a trend. It is infrastructure.Much attention has recently centred around the revised net metering regime, which materially alters project economics for new users. Payback periods that once hovered under two years for many consumers are now stretching toward five to six years in several cases.

The policy shift undoubtedly dents the attractiveness of new on-grid installations.

Yet the assumption that net metering alone drove Pakistan’s solar boom misses the larger story.

The real engine behind adoption was always behind-the-meter economics. Consumers were reacting to expensive and unreliable grid electricity, not merely chasing lucrative buyback rates. A significant portion of installations never depended heavily on exporting excess power back to the grid in the first place. Energy security, bill reduction, and operational continuity mattered far more.

That underlying logic has not disappeared.

If anything, the market now appears to be entering its next evolutionary phase: storage.

The lithium-ion battery import trend is beginning to reveal where consumer behaviour is heading. April 2026 recorded the highest-ever monthly battery imports at nearly $48 million. On paper, the numbers may still appear modest relative to the scale of solar panel imports. But the trajectory is difficult to ignore.

Battery imports in FY26 are on track to approach $250 million, nearly six times the level seen in FY23.

That is not noise.Consumers increasingly understand that the economics of solar are changing. If excess daytime generation cannot be exported at highly attractive rates, the next best alternative is obvious: store it.

For households and businesses alike, battery systems offer greater self-consumption, reduced dependence on the grid during peak tariff hours, backup during outages, and a pathway toward deeper energy autonomy.

In many ways, batteries solve the very problem that revised net metering economics created.

The transition may also fundamentally reshape the nature of Pakistan’s distributed energy landscape. The first wave of solar adoption was largely about generation capacity. The next wave could revolve around optimization, storage, and intelligent energy management.

The battery curve is still small enough to escape mainstream attention. But so was solar once.

And just as solar imports once appeared too small to matter before snowballing into a structural shift, batteries now seem poised to become the next mini revolution quietly unfolding underneath Pakistan’s energy transition.

FE-25 deposits stood at approximately $6.8 billion in April 2026, compared to the latest peak of around $7.1 billion in September 2025. This represents a decline of about 3.8 percent from peak. On absolute levels, the position remains broadly intact. There is no evidence of a sharp drawdown or panic conversion out of commercial-bank foreign currency deposits. However, the relative movement is mildly adverse. The system still has a dollar cushion, but that cushion is no longer thickening.

This distinction is critical. SBP reserves reflect the state’s external buffer. FX liquidity held with commercial banks reflects the market-facing buffer. It captures depositor confidence, exporter conversion behavior, importer financing demand, and the banking system’s ability and willingness to intermediate foreign currency liquidity. A stable level offers comfort. A weakening trend reduces that comfort.

The trade-finance picture is also mixed. FE-25 export financing declined to approximately $872 million in April 2026, down from its recent peak of about $1.04 billion in November 2025. This is a decline of nearly 16 percent. Import financing stood at around $961 million, still well below its December 2024 peak of about $1.63 billion, but showing a slight increase over the previous month. Overall FE-25 trade finance remains around 28 percent below its late-2024 peak.

In normal conditions, lower trade-finance utilization may be read as lower pressure. In current conditions, the interpretation is less straightforward. It may indicate lower import demand, but it may also reflect caution by banks, or reduced appetite for FCY intermediation. The slight uptick in import financing in April therefore needs to be watched closely.

The external backdrop has become materially less benign. The Iran-US war and extended Gulf crisis have widened the pressure channels facing Pakistan. The risk is no longer limited to oil prices. It extends to LNG availability, freight costs, insurance premia, fertilizer imports, shipping delays, remittance sentiment, importer front-loading, and exchange-rate expectations. These pressures are emerging at a time when goods exports remain weak, services exports are improving but still insufficient, and remittances continue to carry much of the current account.

The short-term currency outlook is therefore not one of immediate disorder, but of a weakening bias. The April data does not justify panic. It does justify caution. If commercial-bank FX balances continue to drift down while import financing begins to rise, the pressure is likely to appear first in forward premia and importer behavior, before moving into the spot market. SBP can use reserves, interest rates, and administrative tools to manage the adjustment, but those tools cannot permanently replace private FX confidence.

The latest reading is clear: no rupture yet, but the direction has turned mildly bearish for the rupee. The private FX buffer remains present, but its momentum is fading just as the external shock is broadening.

The company is engaged in the purchase, manufacturing and sale of footwear, tyres and tubes as well as technical rubber products. A huge portion of SRVI’s sales revenue comes from export markets particularly European market.

The company has also started expanding in the US, Australia and Middle East.

Pattern of shareholding

As of December 31, 2025, SRVI has a total of 46.987 million shares outstanding which are held by 1985 shareholders. 41.86 percent of the company’s shares are held by its Directors, CEO, their spouse and minor children followed by local general public holding 31.55 percent shares of SRVI.

NIT and ICP account for 11.69 percent shares of the company while associated companies, undertakings and related parties have a stake of 8.17 percent in SRVI.

Modarbas and Mutual funds account for 2.68 percent shares while pension funds hold 1.42 percent shares of SRVI.

Around 1.34 percent of the company’s shares are held by joint stock companies. The remaining shares are held by other categories of shareholders.

Historical Performance (2019-25)

SRVI’s topline slid thrice during the period under consideration i.e. in 2020, 2024 and 2025. Conversely, its bottomline which had been constantly ticking down until 2022 recorded a staggering rebound in 2023. This was followed by a drastic decline in 2024. In 2025, SRVI’s net profit posted staggering growth, however, couldn’t reach the level last attained in 2023.

SRVI’s gross and operating margins which had been ascending until 2020 significantly plunged in 2021. In the subsequent two years, gross and operating margins considerably recovered. In 2024, gross margin registered a steep fall while operating margin attained an unprecedented level.

In 2025, both gross and operating margins significantly grew with the latter attaining its optimum level. SRVI’s net profit margin followed a descending trend since 2019 and bottomed out in 2022. This was followed by a significant rise in 2023 and then a dip in 2024.

In 2025, net margin also attained its optimum level. The detailed performance review of the period under consideration is given below.

In 2019, SRVI’s topline grew by 8.62 percent year-on-year to clock in at Rs.26,156.20 million. This came on the back of local sales which grew by 20 percent during the year.

Conversely, export sales shrank by 13 percent during 2019. Across the product categories, sales of tyres posted a momentous growth both in local and export markets and continued to be the mightiest source of revenue for SRVI to clock in at Rs.15,960 million in 2019 (61 percent of total revenue). 2019 was the year when the company began agricultural tyre production which received an overwhelming response from the market.

Sales revenue from technical rubber products also inched up during the year, however, only in local market, while no sales of this product category was made in the export market.

Technical rubber products contributed only Rs.231.18 million to the topline of SRVI which was less than 1 percent of the total sales revenue of 2019. Sales of footwear weakened in 2019 mainly on the back of lower export sales while local footwear sales also posted a marginal growth. Overall, the footwear category contributed Rs.9,964 million to the topline in 2019 which was roughly 38 percent of SRVI’s total sales revenue of 2019.

Despite high cost of sales on account of high inflation, gross profit grew by 12.73 percent year-on-year in 2019 with GP margin climbing up to 18.67 percent from GP margin of 18 percent recorded in 2018.

Operating expense grew by 7.83 percent year-on-year in 2019 mainly on account of market induced rise in salaries, higher freight and insurance charges, tremendous growth in advertising and publicity budget as well as sample charges. Other expense grew by 39 percent year-on-year in 2019 mainly on the back of higher provisioning against expected credit losses.

However, other expense was counterbalanced by other income which posted a stunning 57.29 percent year-on-year growth on account of robust exchange gain. Operating profit grew by 25.78 percent year-on-year in 2019 with OP margin rising from 7.19 percent in 2018 to 8.32 percent in 2019.

Finance cost drastically grew by 90.78 percent year-on-year in 2019 on the back of high discount rate. Debt-to-equity ratio stayed at 38 percent for the third consecutive year in 2019.

The growth in finance cost pushed the net profit down by 16.48 percent year-on-year in 2019 to clock in at Rs.886.36 million with NP margin of 3.40 percent down from NP margin of 4.41 percent posted in 2018. EPS also descended from Rs.56.47 in 2018 to Rs.37.73 in 2019.

In 2020, SRVI’s net revenue slumped by 6.55 percent year-on-year to clock in at Rs.24,442.49 million. The company had to suspend its operations owing to the lockdown imposed due to outbreak of COVID-19 and hence the capacity remained underutilized.

The major hit to the topline came from export sales which were almost halved in 2020 to clock in at Rs.3001.45 million due to restrictions on the movement of people and goods on account of COVID-19. Local sales grew marginally by 8 percent year-on-year to clock in at Rs.21,394 million in 2020.

A sneak into the categories shows that footwear sales posted major slump of 40 percent year-on-year due to massive drop in export sales. Sales of tyres grew by 12.7 percent year-on-year and it contributed around 74 percent to the topline.

The export sales of technical rubber products were discontinued in 2019, while local sales in this category almost doubled in 2020, yet failed to produce any significant impact on the topline as its share in the overall revenue hovered around 1.9 percent in 2020.

Reduced operational activity resulted in year-on-year drop of 8.23 percent in cost of sales. This drove the GP margin up to 20.13 percent in 2020. Operating expense also slid by 8.57 percent year-on-year in 2020 due to curtailed expenditure on freight and insurance, advertising and publicity as well as a significant drop in samples expense.

Other expense grew by 30 percent year-on-year in 2020 on the back of additional allowance booked for expected credit losses as well as higher provisioning done for WWF and WPPF.

Other income dwindled by 56.96 percent year-on-year in 2020 due to massive drop in exchange gain on the back of lesser export sales.

Operating profit grew by 5.40 percent year-on-year in 2020 with OP margin rising up to 9.38 percent. Finance cost dropped by 3.47 percent year-on-year in 2020 due to monetary easing to spur business activity amidst COVID-19. The dip in finance cost was registered even after an increase in the long-term and short-term borrowings of the company during the year. The debt-to-equity ratio of SRVI surged to 40 percent in 2020.

The bottomline dropped by 22.15 percent year-on-year in 2020 to clock in at Rs.690.02 million with NP margin of 2.82 percent. EPS also dropped to Rs.14.69 in 2020.

In 2021, SRVI’s topline boasted the highest ever growth of 33.89 percent year-on-year to clock in at Rs.32,724.92 million. Tyre division continued to be the main growth contributor.

The revenue from tyre division grew by 37.5 percent year-on-year to clock in at Rs.24,747 million in 2021 with a share of 76 percent in the overall sales mix. Sale of footwear and technical rubber products grew by 21 percent and 59 percent respectively in 2021. Footwear division had a contribution of 22 percent in the sales mix of SRVI. The remaining 2 percent was contributed by the technical rubber products.

High inflation, energy and fuel prices as well as Pak Rupee depreciation pushed the cost of sales up by 40.66 percent year-on-year in 2021. Consequently, GP margin dropped to 16.1 percent in 2021.

High ocean freight charges, increased salaries and benefits as well as higher advertising and promotion budget resulted in 33.94 percent year-on-year hike in operating expense. Other expense dropped by 58 percent year-on-year in 2021 on account of lesser allowance booked for expected credit losses as well as lesser provisioning done for WWF and WPPF.

Conversely, other income magnified by 110.20 percent year-on-year in 2021 primarily on the back of scrap sales and amortization of government grant. Operating profit shrank by 19.33 percent year-on-year in 2021 with OP margin drastically falling to 5.65 percent.

Despite monetary easing, finance cost grew by 21.19 percent year-on-year in 2021 due to considerable rise in borrowings during the year. SRVI’s debt-to-equity ratio further climbed up to 52 percent in 2021. The bottomline nosedived by 48.29 percent year-on-year in 2021 to clock in at Rs.356.83 million with NP margin of 1.1 percent. EPS also dropped to Rs.7.59 in 2021.

SRVI’s topline further grew by 30.17 percent year-on-year to clock in at Rs.42,599.48 million in 2022. The growth came on the back of tyre and footwear division which grew by 27 percent and 50 percent respectively during 2022 while sales of technical rubber products contracted during the year.

Cost of sales grew by 26.10 percent year-on-year; however, robust sales volume as well as upward price revision pushed the gross profit up by 51.40 percent year-on-year in 2022.

GP margin regained its lost momentum and clocked it at 18.72 percent in 2022. Increase in export sales during the year resulted in high freight charges. Besides, higher salaries and wages as well as advertisement and publicity expense culminated into 35.85 percent year-on-year increase in operating expense in 2022. Write off of assets as well as higher allowance for expected credit losses and WPPF as well as generous donations pushed other expense up by 168 percent in 2022.

However, it was counterbalanced by 280.10 percent rise in other income on account of sky-rocketed dividend income recognized during 2022. Operating profit surged by 117.38 percent year-on-year in 2022 with OP margin of 9.44 percent.

Excessive monetary tightening and increased borrowings produced 133.97 percent growth in finance cost in 2022. Debt-to-equity ratio further climbed up to 58 percent in 2022. SRVI’s profit before tax in 2022 was by 70.98 percent year-on-year.

However, higher provision for taxation shoved net profit down by 0.67 percent year-on-year to clock in at Rs.354.43 million in 2022. NP margin dropped to 0.83 percent while EPS clocked in at Rs.7.54 in 2022.

2023 brought lucky streak for SRVI with year-on-year topline growth of 30.86 percent. This drove the net sales up to Rs.55,744.03 million. This was backed by an increase in the prices and volumes of both tyre and footwear division.

Tyre division’s sales posted a year-on-year growth of 25 percent in 2023 with its exports strengthening by 87 percent during the year on account of increased off-take and Pak Rupee depreciation.

The revenue of footwear division grew by 45 percent year-on-year in 2023 which was primarily driven by growth in retail business. 83 new outlets were opened during the year which took the tally to 232 as of December 31, 2023.

Gross profit grew by 71.70 percent year-on-year with GP margin climbing up to its optimum high level of 24.56 percent in 2023. Operating expense grew by 39.28 percent year-on-year in 2023 on the back of elevated payroll expense, freight & insurance charges as well as publicity & advertising expense incurred during the year.

Other expense dipped by 12.25 percent in 2023 as lesser assets were written off during the year. Other income plunged by 42 percent in 2023 due to thin dividend income which eclipsed the effect of higher exchange gain and lofty scrap sales recorded during the year. SRVI’s operating profit multiplied by 81.84 percent in 2023 with OP margin climbing up to 13.12 percent.

Finance cost escalated by 63.26 percent in 2023 due to high discount rate. Debt-to-Equity ratio stayed at 58 percent in 2023. SRVI registered 278.68 percent growth in its net profit in 2023 which clocked in at Rs.1342.136 million with EPS of Rs.28.56 and NP margin of 2.4 percent.

In 2024, SRVI’s net sales radically dropped by 70.16 percent to clock in at Rs.16,636.19 million. This was the lowest topline recorded by the company over the period under review.

During the year, the company entered into a scheme of arrangement for the de-merger of its tyre undertaking, retail undertaking and Speed (Private) Limited shares to its wholly owned subsidiaries. This was the reason for the massive decline in SRVI’s net sales during the year. Cost of sales dipped by 61.73 percent in 2024. Gross profit declined by 96 percent in 2024 with GP margin falling down to 3.27 percent.

The transfer of three of its businesses to its subsidiaries resulted in 85.53 percent slump in operating expense in 2024. This was due to a decline recorded in salaries expense, freight & insurance charges, advertising & publicity expense, fuel & power charges, depreciation and travelling expense.

Number of employees was reduced from 7902 employees in 2023 to 1905 employees in 2024. After the demerger, other income proved to be the main source of income for the company.

In 2024, SRVI’s other income mounted by 431.19 percent to clock in at Rs.3,307.05 million out of which dividend income accounts for Rs.2788.316 million. SRVI also recorded interest income on loan to subsidiaries and rental income in 2024 which also contributed in driving up its other income.

Operating profit thinned down by 61.20 percent in 2024, however, OP margin reached an unparalleled level of 17 percent. Finance cost tumbled by 56.75 percent in 2024 due to decline in outstanding short-term and long-term borrowings at the end of the year.

Debt-to-equity ratio fell from 58 percent in 2023 to 40 percent in 2024. SRVI recorded net profit of Rs.324.421 million in 2024, down 75.83 percent year-on-year. This translated into EPS of Rs.6.90 and NP margin of 1.95 percent in 2024.

After the restructuring its operations in 2024, SRVI operates as a holding company which maintains a diversified portfolio in varied sectors through its subsidiaries. In 2025, SRVI’s net sales deteriorated by 59.80 percent to clock in at Rs.6687 million.

In the footwear segment, while local sales ticked up, drastic fall in export sales created an overall negative variance. In tyres and related raw materials segment, local sales radically deteriorated while no export sales were recorded. Sale of technical and rubber products (local) also recorded a downfall in 2025.

Furthermore, commission and processing income also diluted in 2025. Cost of sales fell by 62.47 percent in 2025 due to divestment of operations. This resulted in 19 percent growth recorded in gross profit in 2025 with GP margin climbing up to 9.68 percent.

Operating and other expense surged by 8.88 percent in 2025. While distribution expense tumbled during the year due to lesser freight charges and sample charges, administrative expense surged on the back of higher payroll expense, travelling charges and depreciation charge on fixed assets.

Number of employees increased from 1905 in 2024 to 2084 in 2025. Other expense also mounted in 2025 due to increased provisioning done for WWF and operating fixed assets written off. Other income dipped by 9.97 percent in 2025 as gain on disposal of long-term investments was offset by lower dividend income and lesser interest on loan to subsidiary companies.

Dividend income of Rs.2017 million recognized by SRVI in 2025 comprised of dividend received from Service Long March Tyres (Private) Limited, Service Global Footwear Limited, Service Tyres (Private) Limited and Service Industries Capital (Private) Limited.

SRVI recorded 11.13 percent thinner operating profit in 2025; however, OP margin attained its optimum level of 37.72 percent. Monetary easing as well as lower working capital requirements resulted in 40.44 percent lower finance cost in 2025.

Net profit clocked in at Rs.710.279 million in 2025, up 118.94 percent year-on-year. This translated into EPS of Rs.15.12 and NP margin of 10.62 percent in 2025.

Recent Performance (1QCY26)

During the first quarter of the ongoing calendar year, SRVI’s topline deteriorated by 46.67 percent to clock in at Rs.1309.031 million. The revenue comprised of local sales of footwear (Rs.1283.76 million) and local sales of technical rubber products (Rs.25.27 million). No export sales in any segment, no processing and commission income and no sale of tyres were recorded in 1QCY26.

Cost of sales plunged by 51.60 percent in 1QCY26 due to curtailed operations. This resulted in 12 percent enhancement in gross profit in 1QCY26 with GP margin clocking in at 16.28 percent versus GP margin of 77.5 percent recorded in 1QCY25.

Operating and other expense collectively grew by 20.78 percent in 1QCY26 due to higher payroll expense, depreciation expense, travelling expense and provisioning done for WWF. What greatly buttressed the financial performance of SRVI in 1QCY26 was 108.71 percent increase in other income on the back of superior dividend of Rs.800 million received from its subsidiary company: Service Tyres (Private) Limited.

The dividend of Rs.310 million announced by another subsidiary, Service Global Footwear Limited will be reflected in the next quarter. Superior dividend income pushed up SRVI’s operating profit by 105 percent in 1QCY26 with OP margin clocking in at 67.66 percent versus OP margin of 17.59 percent recorded in 1QCY25.

Finance cost tumbled by 30.28 percent in 1QCY26 due to monetary easing and lesser outstanding liabilities. Net profit improved by a massive 720.51 percent to clock in at Rs.532.306 million in 1QCY26. This translated into EPS of Rs.11.33 and NP margin of 40.66 percent in 1QCY26 versus EPS of Rs.1.38 and NP margin of 2.64 percent registered in 1QCY25.

Future Outlook

The company expects that the restructuring and realigning of its segments will result in improved focus and better performance of all the segments in the future. Macroeconomic environment appears to be uncertain on the back of ongoing tensions in the Middle East region which has led to a sharp hike in fuel prices. This will result in elevated input cost and energy cost for the subsidiary companies of SRVI and take a toll on their sales.

On the positive front, SRVI’s subsidiary, Service Long March Tyres Limited (SLM) has applied for listing on the Pakistan Stock Exchange through an IPO. The IPO conducted in May 2026 was well received by the market and was fully subscribed with an estimated company valuation of $550 million.

Under the expansion strategy, SLM plans to not only expand its production of truck and buses radial tyres but also expand to passenger cars tyre production. With the local truck and bus radial tyre market already facing a production shortfall and greatly dependent on imports, this expansion will provide SLM with an immense opportunity to meet the rising demand and replace the imported products.

Besides, with rising inflation and shrunken customer pockets, passenger cars are already gaining a lot of traction. SLM’s expansion into PC tyres will further boost its revenue and profitability and will ultimately benefit SRVI.

April 2026 summed up the problem. Pakistan received FDI inflows of USD273.4 million during the month, but outflows of USD218.9 million brought net FDI down to just USD54.5 million. That is hardly a confidence-building number. For a country that desperately needs foreign capital, technology, jobs, and export capacity, this is not the kind of investment story that inspires comfort.

The 10-month numbers are even more sobering. Net FDI in July-April FY26 stood at USD1.409 billion, compared to USD2.035 billion in the same period last year — a decline of around 31 percent. Gross inflows also fell, from USD3.632 billion to USD2.978 billion, while outflows remained high at USD1.569 billion. In plain terms, Pakistan is attracting less investment and retaining too little of what it attracts.

This is not just a bad month. It is part of a long pattern. Pakistan’s FDI has been stuck in a low-growth zone for years. In some years, the numbers improve slightly; in others, they fall back again. But the country has rarely seen the kind of sustained, broad-based foreign investment that can change the direction of the economy.

The sectoral breakup tells its own story. Power remained the largest recipient of FDI in 10MFY26 with net inflows of USD785.6 million, followed by financial business at USD658.9 million. Together, these two sectors carried most of the investment account. Electrical machinery received USD121.1 million, while communications stood at only USD43.9 million. Cement, meanwhile, saw a sharp reversal in April, with outflows of USD103.3 million, leaving the sector with a negative monthly net FDI of USD102.2 million.

That is the worrying part. Pakistan is not seeing a strong foreign push into export-oriented manufacturing, technology, engineering, pharmaceuticals, logistics, agribusiness, or high-value services.

The investment that comes in is still concentrated in a few regulated or infrastructure-linked sectors. That may help, but it does not create the diversified industrial base Pakistan needs.

The country-wise numbers show the same narrowness. China remained the largest investor, with net FDI of USD739.6 million in 10MFY26, though this was down from USD1.041 billion in the same period last year. Hong Kong followed with USD281.3 million, the UAE with USD168.9 million, the UK with USD98.7 million and South Korea with USD80.5 million.

The top 10 countries accounted for USD1.800 billion, while the rest of the world contributed only USD227.8 million. Pakistan’s FDI story remains dependent on a small group of countries.

The reasons are not hard to understand. Investors can deal with difficult markets, but they struggle with unpredictable ones.

Pakistan has too many moving parts: frequent tax changes, uncertain energy pricing, approval delays, repatriation concerns, weak contract enforcement, circular debt, political noise, and regulatory overlap between federal and provincial authorities. For investors, each adds another layer of risk.

This is why macroeconomic stabilization alone is not enough. A better current account number may please lenders. An IMF programme may reduce default risk. Higher reserves may calm markets for a while.

But long-term investors look beyond the next quarter. They ask whether policies will remain stable, whether profits can be repatriated, whether contracts will be honoured, whether taxes will suddenly change, and whether they can expand without getting trapped in approvals.

Until Pakistan fixes that trust deficit, FDI will remain what it has been for far too long: occasional inflows, persistent outflows, narrow concentration, and recurring disappointment.

In April 2026, IT and IT-enabled services exports stood at USD423 million, up 33 percent year-on-year from USD317 million in April 2025 and around 2 percent higher than March 2026. This was the second consecutive month above USD400 million and the second-highest monthly number on record, after December 2025’s USD437 million.

The bigger story is the cumulative trend. In 10MFY26, Pakistan’s technology exports reached around USD3.81 billion, compared to roughly USD3.14 billion in the same period last year, showing growth of about 21 percent.

In an economy struggling with energy imports, debt repayments and weak investment inflows, this matters. Every dollar earned through exports reduces the need to borrow, roll over debt, or depend on temporary external support.

The sector has come a long way. SBP-based data shows that ICT exports have risen from around USD1.1 billion in 10MFY20 to nearly USD3.8 billion in 10MFY26. Their share in total services exports has also increased sharply.

IT is no longer a side story in the country’s export mix; it is becoming one of the country’s more serious foreign exchange earners. This is important because Pakistan’s export base has remained too narrow for too long. Textiles still dominate, followed by rice and a few other low-complexity goods.

The monthly trend also shows that FY26 has gained momentum. After a record high in December and some moderation in early 2026, IT exports crossed USD400 million again in March and April. This suggests the sector has moved into a higher monthly range, rather than relying on one-off spikes.

Net IT exports are also encouraging. Exports minus imports stood at USD355 million in April, up 23 percent year-on-year. This is important because gross export numbers can sometimes overstate the real contribution if import payments are also rising.

The good news should not lead to complacency. The government has set a USD5 billion IT export target for FY26, but analysts expect the year to close closer to USD4.5 billion to USD4.6 billion.

Under the Uraan Pakistan plan, the government wants IT exports to reach USD10 billion by FY29. Meeting that target will require not just higher numbers, but more transparent and sustainable growth.

The numbers are encouraging, but they are not beyond question. Part of the recent rise may reflect better repatriation of dollars after SBP’s facilitation measures, while some industry voices suspect tax arbitrage and re-routing through IT entities. That does not make the sector’s growth fake, but it does mean Pakistan needs cleaner data: how much is corporate software exports, how much is freelancing, and how much is simply income finding the lowest-tax route home.

His experience spans global financial institutions and technology-led transformation,including leadership roles in digital finance and fintech at JPMorgan Chase and Deloitte. He has also worked on AI-based nano-lending, blockchain-enabled cross-border remittances and data-driven digital financial products.

Recognized globally through awards and nominations such as Innovation in Payments, the Emerging Payments Award and GSMA Glomo, Jahanzeb continues to champion profitable, technology-led banking models that combine shareholder value with broader financial inclusion.

Following are the edited excerpts of a recent conversation BR Research had with him:

BR Research (BRR): Pakistan’s cashless economy agenda has been around for over a decade. But with the SBP’s digital bank licensing framework, the PM’s Cashless Pakistan initiative and rising smartphone penetration, 2025 appears to be a real inflection point. What has changed this time that makes the moment different from previous attempts?

Jahanzeb Khan (JK): Pakistan’s digital banking shift is being driven by a combination of progressive regulatory support, smarter policy making decisions and most importantly changing consumer behavior. Recently, policy makers, regulator and the private sector have been aligned on critical national level KPIs and have worked in cohesion on a shared cashless economy agenda focused on transparency via digital and financial inclusion.

The introduction of digital banking licenses by the regulator in 2023 has accelerated innovation beyond P2P payments. easypaisa digital bank is the first one to launch commercial operations followed by two other players backed by international investors that will help increase speed of innovation and digitized service offerings for the masses.

Pakistan’s retail economy has long been cash-driven. The Cashless Pakistan initiative now aims to bring 2 million QR-enabled merchants into the digital ecosystem. For the first time, policymakers are helping the private sector share the cost of onboarding micro-retailers. The early signs are encouraging, with QR transaction throughput reaching nearly Rs28 billion last month. The next step is to sustain this push through smarter incentives, stronger merchant and consumer value propositions, and policies that make cash costlier than digital payments to reduce currency in circulation and improve financial transparency.

The Prime Minister has also set targets of 120 million accounts and 100 percent overseas remittances through bank accounts or mobile wallets, up from 80 percent, to reduce cash reliance and improve transparency. This reflects a broader push to move beyond basic payments and bring remittances, cross-border transactions, and freelance payments into the formal economy. easypaisa digital bank is playing a key role in this shift, with over 25% share of electronic and digital banking transactions, more than 60 million registered account holders, and the largest mobile banking app user base in Pakistan.

BRR: Given your experience across mature digital payment markets in North America and Asia, how do you assess Pakistan’s digital finance journey? Where is the country ahead, and where do the structural gaps remain?

JK: Having spent over 20 years at JPMorgan Chase & Co. in multiple global roles, working in digital banking across North America and Asia with the largest fintech player- Ant Group, I believe this is the pivotal moment for Pakistan to accelerate digital banking adoption and move beyond payments.

Pakistan has made strong progress in mobile payments and financial access, particularly among underserved segments. However, cash is still dominant in multiple areas-challenges remain around user trust, digital literacy, fraud prevention, and broader adoption of digital financial services beyond payments.

It is critically important for digital banking institutions to invest in technology and embrace AI solutions to gain the trust of the customers. We at easypaisa have already deployed industry first AI based customer experience solution in our app and are utilizing multiple machine learning and AI based tools to enable us with more informed insights based on customer behavior data. There remains opportunity in the industry to improve customer experience and inject smarter tools to detect anomalous transactional behavior and protect our customers.

A thriving private sector is also critical to the success of the overall ecosystem. In the last couple of years, easypaisa team has been able to position to be long term sustainable with phenomenal and 7x earnings growth in PBT YOY. These earnings have boosted the confidence of our shareholders and many others in the industry and overseas about the upside potential of digital banking in Pakistan. A longer-term vision with steadfast management and patient investors will be critical in Pakistan for the overall growth of digital ecosystem.

The encouraging part is that global players see strong long-term potential in Pakistan especially in our growing youth bulge. With geopolitical stability and certainty in policy making, continued investment in technology and infrastructure, the country can accelerate toward financial inclusion.

BRR: What does easypaisa’s transition from a mobile wallet to a full digital bank mean for the everyday Pakistani customer?

JK: Becoming Pakistan’s first digital retail bank was a major milestone for easypaisa and the country’s digital banking ecosystem. It allows us to move beyond payments and offer a wider range of services including savings, lending, insurance, wealth management, international remittances, and foreign currency accounts. We have more than 4 million customers who have now graduated from basic payments to investing with us. This shows the confidence of our client base to trust easypaisa with their hard-earned incomes in a very short duration since our inception as a digital bank.

For customers, digital bank means easier access to banking services directly from their phones without needing to visit a physical branch. It also allows users to access higher transaction limits, better savings options, and financial protection products within one ecosystem. At the same time, we continue investing in technology, AI-driven customer support, and stronger fraud controls to deliver a seamless and secure banking experience and gain trust of the customer.

Just like easypaisa has democratized the domestic payments, we as a digital bank will seek to provide cross border remittance and FX solutions in the long run for our customers. As a digital bank, we will be moving from a historical mass segment approach to a segmented approach with products and services catered to multiple segments of our society. With the entry of five digital banks, consumers will have plenty of more choices available at their fingertips that they traditionally had access to.

BRR: As Raast makes payments and interoperability less of a differentiator, where does easypaisa build its real moat — customer experience, merchant ecosystem, credit, data, or something else?

JK: Raast has created the national real time payment rails that have helped take us to near real time settlements. Differentiation will now come from customer experience, trust, and accessibility.

At easypaisa, our focus is on delivering seamless, secure, and always-available financial services for all Pakistanis, particularly underserved communities. What strengthens our moat is the combination of a digital-first platform with a nationwide network of 245,000+ retail agents, serving more than 5 billion transactions and throughput of more than Rs16 trillion annually in 2025 and growing, giving customers both digital convenience and physical reassurance.

As the largest billing platform in the country and holding a majority share of the mobile top ups in Pakistan, easypaisa already services high frequency use cases for the masses. With recent launch of digital Term Deposit solution, we have now enabled millions to invest in their future with the click on the easypaisa app. Our insurance marketplace offers more than 50 different products enabling our customers to protect them in times of needs as well. This ecosystem is unmatched in the industry whereby payments now have almost become a commodity.

With scale comes responsibility- we have introduced AI-driven customer support through tools like our chatbot “ello” to improve response times and customer engagement at scale. Ultimately, our strength lies in combining technology, accessibility, and trust. Success will be determined by stability, trust and ultimately the bouquet of personalized services that financial institutions can enable over and above commoditized payments.

BRR: How can Pakistan close the gap between financial access and active usage, especially for women and rural users who may have accounts but rarely transact digitally?

JK: Pakistan’s financial inclusion has crossed 67 percent, but active usage remains the real challenge, especially among women and rural communities. Female inclusion still stands at only 47 percent, representing a major opportunity for growth.

The key is reducing friction in onboarding, simplifying digital account opening, and giving users practical reasons to transact digitally. A large portion of retail payments has remained heavily cash driven to date. Regulatory improvements by SBP around simplified onboarding and faster account approvals will help accelerate this shift and enable more women to participate within the formal economy. Digitization of the merchant ecosystem will enable additional use cases for customers as well.

As the industry scales, it will become critical to provide stability in our tech platforms so consumers in rural areas feel confidence to not only transact with our platforms but have the utmost confidence and trust. Improved mobile data coverage is a foundational requirement. Recent 5G auction will provide impetus in the telecom sector to improve their quality of service.

Gaining trust of the customers in digital services requires a concerted effort by the public and private sectors to continue to strengthen fraud and risk platforms and move towards strengthened e-KYC and e-KYB mechanisms. As trust in our platforms increase, rural population will start to adopt digital means as well with higher smart phone penetration.

At easypaisa, we are focused on driving usage through savings, lending, and wealth management products while continuing to expand access for underserved communities.

BRR: How do you shift consumer behaviour from cash to digital at scale, especially among merchants, women and daily wage earners who may distrust formal systems?

JK: Cash remains deeply embedded in Pakistan’s economy, with cash in circulation reaching Rs10.6 trillion and a large undocumented economy still reliant on cash transactions. A significant share of Pakistan’s transactions is still cash-based, contributing to an undocumented economy estimated at 40 percent of GDP. Digitizing even a portion of these transactions could generate savings of Rs164 billion annually, while reducing the undocumented economy by 25 percent has the potential to unlock trillions in national savings.

Driving behavioral change requires accessibility, trust, and awareness. Investing in smarter solutions will be required to gain such trust at scale. easypaisa’s branchless banking model, supported by over 245,000 agents nationwide, helps underserved communities access digital financial services even in remote areas.

Government-backed programmes like BISP, the PM Ramazan Package, and recent fuel subsidy initiatives have also played an important role by distributing financial assistance digitally instead of through cash, helping build familiarity and trust in digital finance. Governments push to enable all G2G payments to digital means will also move the needle heavily towards transparency.

BRR: How realistic is easypaisa’s ambition to become a primary platform for remittances, freelancers and cross-border payments, and what will it take to shift more flows from informal channels to the formal digital economy?

JK: Remittances play a significant role in supporting Pakistan’s current account by stimulating economic activity and supplementing the disposable incomes of remittance-dependent households. Pakistan remittances are expected.

Given the challenges that include the high cost of remittances and a time-consuming process when it comes to receiving remittances. It is estimated that approximately 26-30 percent of remittance inflows from the Arab corridors to Pakistan are through Informal (hawala) channels, which are considered a low-cost and high-convenience alternative to official channels. There is a need to establish stronger app to app, completely digital cross border solutions, in high traffic corridors to enable ease with simplicity for sending and receiving sides.

Pakistan is already ranked among the world’s top five freelancing markets, with more than 2.3 million active freelancers contributing to digital exports and employment, with the potential to reach $1 billion in terms of revenue, given the support. However, the lack of reliable international payment gateways severely limits their potential to scale up their businesses and operations. Pakistan is also among the world’s largest freelancing markets, but limited access to efficient international payment solutions remains a challenge.

Through partnerships with Ant International that already processes over $300 billion in international payment and our recent collaboration with WorldFirst, easypaisa will provide faster, lower-cost cross-border payment and remittance solutions directly into digital wallets, reducing reliance on informal channels and improving financial transparency.

BRR: As digital finance shifts from wallet downloads to active usage, what are the biggest bottlenecks easypaisa faces in scaling everyday merchant payments beyond major cities?

JK: Merchant acceptance remains a key bottleneck in scaling digital payments in Pakistan, as very few banks actively serve merchants through dedicated digital payment solutions. While wallet downloads show progress, true scale depends on expanding acceptance across everyday businesses.

Under the Government’s Cashless Pakistan initiative, the target is to increase monthly active QR merchants from 500,000 to 2 million by June 2026, supported by Rs3.5 billion subsidy for merchant onboarding and QR payments, as well as the removal of the Merchant Discount Rate (MDR) floor.

However, adoption challenges persist, particularly beyond Tier-1 and Tier-2 cities, where merchants face limited awareness and concerns around usability and value. Currently, only around 159,000 merchants are POS-enabled, leaving most small and informal businesses outside the digital ecosystem. Thereby low cost more affordable QR code solutions become important for the larger ecosystem. While Nadra has done a phenomenal job at providing us a unifying eKYC, we still lack at completeness of eKYB information available nationally. Majority of the long tail merchants have not registered their businesses, making the cost of acquisition extremely high for the private sector.

At easypaisa, we are working closely with the Government of Pakistan and the State Bank of Pakistan to expand QR-based payments by simplifying onboarding, improving awareness, and strengthening merchant value propositions. We are investing billions in this space for the national cause of digitizing the merchant footprint.

BRR: How do you make digital banking simple and accessible for first-time users while keeping it secure against cybersecurity risks and consumer fraud?

JK: Digital banks are driving disruption in Pakistan, but mass adoption among first-time users still depends on building trust, awareness, and protection against fraud. With cybersecurity scams costing Pakistan an estimated $9.3 billion annually, balancing security with convenience is critical.

At easypaisa, we follow a “Trust by Design” and “Privacy by Design” approach, building security, privacy, and ethical data use into products from the start. The focus is on balancing convenience with protection through seamless user experiences, OTPs, biometric verification, liveness detection, and stronger KYC/KYB processes. These controls have kept our fraud ratio extremely low. However, scams remain a serious industry-wide challenge, as many customers are tricked into sharing private information that enables account takeover. Continued public-private investment in customer education is therefore critical to building trust and safe digital adoption.

At easypaisa, we recognize that financial data is among the most sensitive information an individual can share. We will continue to educate our customers and protect them. As we expand our offerings from payments to microcredit, insurance, and beyond, our commitment to data privacy, security, and ethical data use remains unwavering.

BRR: What two or three policy interventions would most accelerate Pakistan’s shift to a cashless economy, and where does the role of government end and the private sector begin?

JK: Going forward, policy interventions that make cash transactions more expensive than digital transactions will be critical in accelerating digital financial inclusion and fostering a more transparent economy. This will also help reduce case in circulation in the long run.

Credit is due to policymakers and regulators who have taken proactive steps to implement policies that support the adoption of digital banking in Pakistan. A major recent milestone has been the establishment of the Pakistan Virtual Assets Regulatory Authority (PVARA) and the introduction of the Virtual Assets Act 2026, creating the country’s first formal legal framework for crypto and digital asset ecosystems. This will enable safer, regulated digital investment avenues in the long run.

Mobile data access with improved quality of service is a foundational requirement in these times. Ministry of IT and Telecom is working closely on this critical goal with private sector players to improve the coverage and quality of data services to the masses. Recent successful 5G auction will go long ways to improve much needed bandwidth presence for millions.

At easypaisa, 31 percent of more than 60 million registered users are women. One key gap remains the low level of female representation in digital wallets and accounts. This continues to be an underpenetrated area, with only 47 percent of women in Pakistan financially included. This is something that requires regulatory and governmental intervention/incentivization to ensure we can bring more women to participate within the formal economy.

BRR: As Pakistan’s digital finance market gets more crowded and policy support for a cashless economy strengthens, does the bigger challenge for easypaisa become customer acquisition or monetization?

JK: Pakistan still has millions of unbanked and underbanked individuals, 5 million youth entering workforce age every year, with an average age of only 21 years, there is plenty of opportunity to acquire. Yet millions remain unbanked - making this one of the largest untapped growth segments in the market. With a national target of 75percent under the Financial Inclusion Strategy 2024–28, this is both a policy priority and a commercial opportunity.

At easypaisa, the strategy is to move customers beyond payments into savings, lending, remittances, and wealth management products over time. High-frequency usage helps deepen engagement and create long-term value for both customers and the business. As payments become a commodity, the ecosystem of products and services beyond basic needs become important to monetize. Ultimately as economies of scale kick in, scale will matter.

Ultimately, financial inclusion becomes commercially sustainable when digital banking evolves from basic access to becoming the customer’s primary financial relationship, when profit meets purpose.

Output was even lower than FY21 levels and only marginally higher than last year, underscoring how far the system still is from reclaiming earlier demand highs despite repeated tariff cuts and the return of industrial consumers to the grid.

If the previous two months hinted at some stability returning, April reversed that momentum rather sharply. Actual generation stood at 9.4 billion units against a reference of 10.6 billion units, leaving an 11 percent shortfall, arguably the largest negative deviation from reference seen in recent memory.

The shadow of the US-Israel conflict now sits firmly across the entire energy chain, and Pakistan’s power sector has not escaped unscathed.

The biggest disruption came from RLNG. For the second consecutive month, RLNG-based generation collapsed well below planned levels as Qatar’s force majeure left little to no imported LNG available for power generation.

RLNG’s share in the generation mix dropped to just 4 percent against a reference share of 18 percent. Actual RLNG generation stood at merely 380 million units, less than a fourth of reference levels and the lowest in 111 months, effectively the lowest since Pakistan started importing LNG.

In reality, even those 380 million units did not come from imported RLNG. Domestic natural gas was diverted toward RLNG-based plants, with generation parked under the RLNG category simply because the pricing structure remains similar to gas-fired generation.

The implication is clear. Pakistan’s most flexible and efficient thermal fleet is now effectively running without the fuel it was designed for.

The fallout from this shortfall was visible across the fuel mix. Hydel generation also underperformed, remaining around 12 percent below reference levels at a time when the system desperately needed low-cost flexibility.

With both RLNG and hydel failing to deliver as planned, the burden shifted toward imported coal and furnace oil plants, which together exceeded reference generation by nearly 1.1 billion units simply to keep the lights on.

That came at a cost. Fuel charges overshot reference levels by roughly Rs1.7 per unit, leading to the fifth consecutive positive monthly fuel cost adjustment. The difference this time, however, is that the pressure is no longer merely a function of expensive fuel. It is increasingly a function of inflexibility.

Pakistan’s electricity demand profile now looks fundamentally different from what it did even two years ago. Midday grid demand continues to collapse during peak solar hours, despite overall electricity consumption rising materially. The rapid spread of off-grid and behind-the-meter solar has hollowed out daytime demand, creating an even deeper duck curve than before.

The real challenge begins after sunset.

The evening ramp requirement has become enormous. Under normal circumstances, RLNG plants would have absorbed much of that burden due to their operational flexibility. But with RLNG supplies drying up, the ramping responsibility has shifted to slower, less efficient, and more expensive generation sources.

This is where the system’s deeper structural weaknesses begin to show.

The problem going forward is that there are very few easy substitutes for RLNG. No amount of diverting domestic natural gas can fully replace the lost capacity.

The dependable generation capacity of domestic gas-fired plants is roughly one-fourth that of RLNG-based plants. Even if every available gas unit runs at full throttle, supply shortages during peak hours are likely to persist over the coming months.

Which leaves the system with only two realistic choices. Either increasingly expensive generation sources will continue to be dispatched to maintain supply, or load shedding will intensify during evening peaks.

In both cases, upward pressure on fuel adjustments and periodic tariff revisions now appear inevitable for the foreseeable future.

The company is engaged in the storing, marketing and trading of Liquefied Petroleum Gas (LPG) throughout Pakistan and trading of low pressure regulators (LPR).

Pattern of Shareholding

As of June 30, 2025, BPL has a total of 22.489 million shares outstanding which are held by 1175 shareholders. BPL’s directors have the majority stake of 54.82 percent stake in the company followed by local general public holding 29.98 percent of its shares.

National Bank of Pakistan accounts for 8.23 percent of the outstanding shares of BPL while 5.94 percent of its shares are held by CDC. The remaining shares are held by other categories of shareholders.

Historical Performance (2019-24)

Over the period under consideration, BPL’s topline rose only in 2019, 2021 and 2022. The company posted net profit only in 2019, 2022 and 2025 Its gross margin rode a downhill journey until 2021, recovered for the next two years followed by a dip in 2025.

On the contrary, its operating and net margins stayed in the positive territory only in 2019, 2022 and 2025. The detailed performance review of the period under consideration is given below.

In 2019, BPL’s net sales grew by 11 percent year-on-year to clock in at Rs. 3249.87 million. This was on the back of increased prices whereas the quantity sold by the company slumped by 9.7 percent year-on-year to clock in at 38,358 MT on account of lesser supply from local refineries and also the expiry of sales contract with NRL.

During the year, the company also imported 12.8 percent lower LPG which clocked in at 12,447 MT. During 4QFY19, BPL’s margins turned negative as there was a skimpy demand from local consumers while the local refineries increased their supply significantly during the period and sold at less than OGRA approved prices. This resulted in 7.38 percent thinner gross profit registered by the company in 2019 with GP margin sliding down from 7.95 percent in 2018 to 6.63 percent in 2019.

During the year, BPL was able to cut down its administrative expense by 1.95 percent as it undertook cost control measures in the areas of vehicle maintenance as well as travelling & conveyance. Distribution expense escalated by 7 percent year-on-year in 2019.

BPL was also able to register 20 percent rise in its other income during 2019 as its liability for cylinder and regulatory deposits was written back during the year. Operating profit slipped by 16.39 percent year-on-year in 2019 with OP margin shrinking from 2.86 percent in 2018 to 2.15 percent in 2019.

BPL was also able to cut down its finance cost by 83.68 percent in 2019 as the company restructured its demand finance facility with NBP under which the balance payment of Rs.165 million had to be paid over next seven years.

As a consequence of loan restructuring and reduced finance cost for the year, BPL was able to post 31.95 percent year-on-year rise in its net profit in 2019 which clocked in at Rs.25.857 million.

EPS grew from Rs.0.87 in 2018 to Rs.1.15 in 2019. NP margin also improved from 0.67 percent in 2018 to 0.796 percent in 2019.

In 2020, BPL registered 20.54 percent downtick in its net sales which clocked in at Rs.2582.45 million. This was on account of 18 percent year-on-year decline in the company’s sales volume which clocked in at 31,465 MT as there was huge influx of imported LPG in the market. Another reason was the withdrawal of participants from the distribution chain on account of government documentation drive.

COVID-19 related disruptions are also to be blamed for the reduced sales volume reported by BPL in 2020. Due to slowdown in sales, the company imported 5652 MT of LPG, down 54.59 percent year-on-year.

Cost of sales also slid by 19.31 percent year-on-year in 2020. This pushed the company’s gross profit down by 37.86 percent in 2020 with GP margin slipping to 5.18 percent.

Administrative expense and distribution expense surged by 4.67 percent and 2.65 percent respectively in 2020 mainly on account of depreciation, advertising and publicity, transportation as well as freight & octroi charges incurred during the year.

As a consequence, BPL posted operating loss of Rs.26.01 million in 2020. Finance cost mounted by a massive 810.69 percent in 2020. Gearing ratio surged from 47.41 percent in 2019 to 53.57 percent in 2020. This resulted in net loss of Rs.109.829 million in 2020 with loss per share of Rs.4.88.

In 2021, the company witnessed a negligible 0.34 percent year-on-year growth in its topline which clocked in at Rs. 2591.30 million. This was despite the fact that its sales volume grew by 4.6 percent year-on-year to clock in at 32,925 MT. This was due to price reduction on account of ample availability of imported LPG in the local market amid sluggish demand due to COVID-19 related protocols.

Lower prices resulted in 74.97 percent shrinkage in BPL gross profit in 2021 with GP margin diminishing to 1.29 percent.

Administrative expense spiked by 11.82 percent year-on-year in 2021 as legal charges went up during the year on account of complaints lodged by Investigation & Intelligence - Inland Revenue (I&I IR) department and also because of general inflation.

Conversely, drop in hospitality charges as low LPG filling was taking place at third party plants culminated into 5.88 percent plunge in distribution cost in 2021. BPL registered operating loss of Rs.137.14 million in 2021, up 427.30 percent year-on-year.

Due to monetary easing, finance cost dwindled by 39.42 percent in 2021. Despite this, BPL’s net loss magnified by 9 percent year-on-year in 2021 to clock in at Rs.119.754 million with loss per share of Rs.5.33.

BPL’s sales volume which showed slight uptick in the previous year, dropped by 4.2 percent year-on-year in 2022 to clock in at 31,548 MT.

However, there was a staggering 73.45 percent year-on-year rise in the company’s topline in 2022 which was recorded at Rs.4494.63 million. This was the consequence of increase in prices during the year.

Gross profit multiplied by over 396 percent in 2022 with GP margin marching up to 3.697 percent. Administrative expense plummeted by 7 percent in 2022 due to reduction in litigation charges related to the complaint lodged by I&I IR. Distribution expense posted 3.81 percent growth in 2022 due to higher freight charges.

Gain on restructuring of loan during the year drove up BPL’s other income by 127.89 percent in 2022. BPL posted operating profit of Rs.40.31 million in 2022 with OP margin of 0.897 percent. Loan restructuring resulted in 49.39 percent downtick in the company’s finance cost for the year. This resulted in net profit of Rs.26.839 million in 2022 with EPS of Rs.1.19 and NP margin of 0.60 percent.

BPL’s topline shrank by 21.38 percent year-on-year to clock in at Rs. 3533.61 million in 2023. This was on account of 1.9 percent lower sales volume which stood at 30,960 MT in 2023.

Higher availability of imported LPG took its toll on the sales volume of BPL during the period. However, higher international crude oil prices improved the company’s GP margin to 4.28 percent in 2023, despite 9 percent year-on-year diminution in gross profit. Administrative expense stayed constant despite inflationary pressure due to lower legal charges incurred during the year.

Distribution expense also slumped by 4.50 percent year-on-year in 2023 due to lower hospitality charges due to low LPG filling at third party plants. Gain on restructuring of loan which BPL booked last year created a high-base effect, resulting in 54.69 percent plunge in other income in 2023.

BPL posted operating loss of Rs.7.34 million in 2023. Finance cost magnified by 315.92 percent in 2023. As a consequence, BPL posted net loss of Rs.66.151 million in 2023 with loss per share of Rs.2.94.

In 2024, BPL recorded 32.72 percent year-on-year decline in its net sales which clocked in at Rs.2377.50 million. This was the result of 61.7 percent lower sales volume which clocked in at 11,867 MT in 2024. This was on account of reduced local LPG quota as well as low demand of LPG due to high inflation and affordability factors.

Cost of sales dropped by 33.79 percent in 2024. While gross profit in absolute terms eroded by 8.71 percent in 2024, GP margin improved to 5.80 percent. Administrative expense inched up by 1.40 percent in 2024 mainly on account of donation paid during the year.

Distribution expense slid by 2.55 percent in 2024 due to lower salaries of sales force as well as low hospitality charges owing to thin demand. Other income mounted by 115.95 percent in 2024 mainly on account of gain on disposal of property, plant and equipment, liability for cylinder deposits and regulator deposits written back as well as higher hospitality and storage income and recovery against cylinder replacement.

Other expense also surged by 219.79 percent in 2024 due to allowance booked for credit loss. This translated into operating loss of Rs. 0.43 million in 2024. Finance cost grew by 22.91 percent in 2024.

During the year, the company restructured its loan with NBP whereby its outstanding long-term loan of Rs.154 million was restructured to running finance facility. BPL’s gearing ratio stood at 89.29 percent in 2024 versus gearing ratio of 65.64 percent recorded in the previous year.

The company recorded net loss of Rs.73.677 million in 2024, up 11.38 percent year-on-year. This culminated into loss per share of Rs.3.28 in 2024.

In 2025, BPL’s net sales eroded by 30.24 percent to clock in at Rs.1658.58 million. This came on the back of 31.20 percent decline in the sales volume which was recorded at 8,166 MT in 2025.

During the year, the company faced working capital limitations, irregular availability of LPG from local suppliers and rigorous competition from unregulated operators functioning across the country. This took its toll on the pricing and distribution dynamics of the industry and put pressure on the margins.

Previously, the formal LPG companies were assigned a stable quota, however, lesser production by refineries and fields disturbed this system, leading to reduced quota. This put the legitimate players at a competitive disadvantage. Demand remained high during the year as natural gas couldn’t suffice the rising population and growth in the housing sector.

Cost of sales dropped by 29.65 percent in 2025. This resulted in 39.75 percent thinner gross profit in 2025 with GP margin dropping to 5 percent. Lower sales volume and curtailed operations resulted in 21.13 percent dip in administrative expense and 12.43 percent decline in distribution expense in 2025.

BPL also streamlined its workforce from 80 employees in 2024 to 73 employees in 2025. Capacity utilization stood at 22.037 percent in 2025, resulting in the storage and filling of 8264 MT of LPG. This was against the capacity utilization of 31.19 percent recorded in the previous year. Other income strengthened by 154 percent in 2025 mainly on account of liability of cylinder deposits and regulator deposits (pertaining to inactive distributors) written back during the year.

Other expense fell by 55.38 percent in 2025 due to lesser allowance for ECL booked during the year. BPL posted operating profit of Rs.91.01 million in 2025 with OP margin of 5.49 percent. This was against the operating loss of Rs.0.43 million recorded in 2024.

Finance cost tumbled by 18.48 percent in 2025 due to monetary easing. Increase in cash & bank balances and higher equity on the back of revaluation surplus recorded on the property resulted in a downtick in gearing ratio which clocked in at 78.91 percent in 2025 versus gearing ratio of 89.29 percent recorded in the previous year.

BPL posted net profit of Rs.29.522 million in 2025 with EPS of Rs.1.31 and NP margin of 1.78 percent. This was against the net loss of Rs.73.677 million and loss per share of Rs.3.28 posted in the previous year.

Recent Performance (9MFY26)

During the nine month period of the ongoing fiscal year, BPL recorded a tremendous 71.78 percent year-on-year growth in its net sales which clocked in at Rs.2014.395 million. This came on the back of 78 percent increase in the company’s sales volume which was recorded at 10,238 MT.

Improved sales volume was due to superior cash flows on account of financing provided by a sister concern, increased availability of local product and higher purchase of imported product.

Greater accessibility of both local and imported products along with efficient inventory management resulted in 284.54 percent higher gross profit recorded in 9MFY26 with GP margin clocking in at 8.23 percent versus GP margin of 3.67 percent recorded in 9MFY25. Lesser litigation charges and constant workforce rationalization squeezed administrative expense by 6.26 percent in 9MFY26.

Distribution expense also ticked down by 4 percent during the period under review despite robust sales volume. This was due to lower salaries of sales force. Other income strengthened by 40.23 percent in 9MFY26 on account of income from third-party LPG storage and write off of cylinder deposits.

Other expense plunged by 37 percent in 9MFY26 likely due to lesser loss recorded on the sale of fixed assets and lesser allowance for ECL booked during the period.

BPL posted operating profit of Rs.134.60 million in 9MFY26 with OP margin of 6.68 percent versus operating loss of Rs.13.86 million recorded in 9MFY25. Finance cost dipped by 33.90 percent in 9MFY26 due to lower discount rate and repayment of entire outstanding short-term loan.

BPL registered net profit of Rs.100.726 million in 9MFY26 versus net loss of Rs.60.429 million recorded in 9MFY25. EPS was recorded at Rs.4.48 in 9MFY26 versus loss per share of Rs.2.69 posted in 9MFY25. NP margin clocked in at 5 percent in 9MFY26.

Future Outlook

With the lack of indigenous pipeline gas, LPG has become an alternative solution for household, commercial and transport sectors.

Price instability and supply impediments are the areas of concern for the company and call for initiatives by the government to incentivize local storage and filling of LPG.

Pattern of Shareholding

As of December 31, 2025, PABC has a total of 361.108 million shares outstanding which are held by 3306 shareholders. Sponsors, Directors, CEO, their spouse and minor children have the majority stake of 55.61 percent in the company followed by Soorty Enterprises (Private) Limited, an associated company of PABC, holding 20 percent of its shares. Local general public accounts for 14.61 percent of the outstanding shares of PABC. Liberty Power Tech Limited and Liberty Mills Limited, the other associated companies of PABC, hold 4.20 percent and 1.33 percent of its shares respectively. The remaining ownership is distributed among other categories of shareholders.

Financial Performance (2020-25)

PABC’s topline and bottomline have made robust strides over the period under consideration, except for 2025 where its net profit plunged. Its margins also rode a steep upward trajectory in 2020 and 2021 followed by a decline in the subsequent year. In 2023, PABC margins posted phenomenal growth. In 2024, gross margin plunged while operating and net margins continued to pick up. All the margins posted a downfall in 2025. The detailed performance review of the period under consideration is given below.

In 2020, PABC’s topline grew by 5.72 percent year-on-year to clock in at Rs.5083.81 million. This was on account of improved sales volume as well as revised pricing strategy. PABC produced 444.34 million cans in 2020, up 6 percent year-on-year. This translated into capacity utilization of 63.5 percent in 2020 versus capacity utilization of 59.81 percent recorded in the previous year. Cost of sales diminished by 5.16 percent in 2020 which was primarily the consequence of lower rent, rates and taxes as well as reduced travelling, conveyance & lodging charges on account of COVID-19. This translated into 43.59 percent bigger gross profit in 2020 with GP margin rising up from 22.33 percent in 2019 to 30.32 percent in 2020. Administrative expense slid by 7.08 percent in 2020 on account of lower legal & professional charges, travelling charges as well as vehicle rentals. Lower freight charges incurred during the year resulted in 12.09 percent lower distribution expense in 2020. Higher profit related provisioning, exchange loss and impairment loss inflated other expense by 739.57 percent in 2020. Conversely, other income slid by 71.54 percent in 2020 as exchange gain recorded in 2019 turned into exchange loss in 2020. Operating profit mounted by 32.94 percent in 2020 with OP margin rising up to 22.05 percent from 17.54 percent in 2019. Finance cost slumped by 26.74 percent in 2020 due to monetary easing as well as significantly lower outstanding short-term borrowings at the end of the year. PABC’s gearing ratio declined from 57 percent in 2019 to 51 percent in 2020. Net profit enlarged by 314.09 percent in 2020 to clock in at Rs.610.655 million with EPS of Rs.1.69 versus EPS of Rs.0.45 reported in the previous year. NP margin also rose from 3.07 percent in 2019 to a whopping 12.01 percent in 2020.

In 2021, PABC’s topline climbed up by 42.21 percent to clock in at Rs.7229.92 million. This was on account of resumption of HORECA industry, educational institutions and offices resulting in improved demand of canned beverages during the year. In accordance with the demand revival, the company produced 558.57 million cans in 2021, resulting in 79.8 percent capacity utilization. Improved sales volume - both in domestic and export markets - as well as upward revision in pricing resulted in 66.40 percent appreciation in PABC’s gross profit with GP margin jumping up to 35.48 percent in 2021. Higher GP margin was also the result of the company’s efforts to reduce its cost of sales. One such effort was the installation of solar panels to curb the rising energy cost. Administrative expense surged by 36.50 percent in 2021 which was the consequence of higher payroll expense as the number of employees increased from 123 in 2020 to 132 in 2021. Furthermore, higher utility expense as well as legal & professional charges also inflated the administrative expense during the year. Distribution expense also multiplied by 23.11 percent in 2021 as a result of higher freight charges. Higher profit related provisioning, loss incurred on derivative instruments and expense on IPO drove up other expense by 161.66 percent in 2021. Other income also amplified by 173.30 percent in 2021 on account of higher profit on TDRs and saving deposits as well as exchange gain recognized on the back of robust export sales. Operating profit rebounded by 64.89 percent in 2021 with OP margin clocking in at 25.57 percent. Finance cost shrank by 34.47 percent in 2021 due to lower discount rate. This was despite increased short-term borrowings particularly in the category of export refinance facility. However, increase in the company’s equity resulted in lower gearing ratio of 41 percent in 2021. Net profit climbed up by 158.18 percent in 2021 to clock in at Rs.1576.587 million with EPS of Rs.4.37. NP margin also progressed to 21.81 percent in 2021.

In 2022, PABC’s topline boasted a staggering 95.76 percent growth to clock in at Rs.14,152.97 million. This was the result of improved sales volume as the company expanded in both domestic and international markets. During the year, the company’s production capacity was enhanced to 950 million cans. Production volume stood at 744.89 million cans in 2022, up 33 percent year-on-year. This culminated into capacity utilization of 78.41 percent in 2022. Cost of sales surged by 102.04 percent in 2022 due to rising commodity prices in the consequence o fRussia-Ukraine crisis as well as Pak Rupee depreciation. Higher cost couldn’t be fully reflected in PABC’s product pricing, resulting in GP margin inching down to 33.41 percent in 2022. In absolute terms, gross profit enhanced by 84.33 percent in 2022. Administrative expense registered 66.52 percent spike in 2022 on account of higher payroll expense as workforce was expanded by 30 employees during the year which took the tally to 162. Higher utility expense also contributed in driving up administrative expense in 2022. Distribution expense hiked by a whopping 377.81 percent in 2022 which was primarily the consequence of amplified freight & other logistics charges. Higher profit related provisioning, exchange loss and provision for slow moving stores & spares drove up other expense by 22.37 percent in 2022. Conversely, other income strengthened by 380.15 percent in 2022 on the back of higher interest income as well as insurance claim received during the year. Operating profit picked up by 91.49 percent in 2022, however, OP margin slightly eroded to clock in at 25.01 percent. Higher discount rate inflated finance cost by 47.38 percent in 2022. PABC operated in Faisalabad special economic zone and hence was exempted from taxation on the basis of minimum tax liability for ten years from the start of its commercial operations. However, during the year, the exemption was withdrawn through Finance Act, 2022. This resulted in a steep 7922.48 percent spike in PABC’s tax expense during the year. This diluted the bottomline growth recorded by the company in 2022. PABC net profit grew by 71.42 percent in 2022 to clock in at Rs.2702.612 million with EPS of Rs.7.48 and NP margin of 19.10 percent.

PABC ended 2023 on a vigorous note with 39.45 percent year-on-year growth in its topline which clocked in at Rs.19,735.90 million. This came on the back of tremendously higher export sales as well as Pak Rupee depreciation. Conversely, local sales struggled during the year as inflationary pressure resulted in reduced consumption of canned beverages. Export sales constituted 59.55 percent of PABC’s overall net sales mix in 2023 versus its share of 42.32 percent in the net sales in the previous year. In line with robust demand from export market, PABC not only enhanced its rated capacity to 1200 million cans in 2023 but also increased its annual production by 13.23 percent to clock in at 843.40 million cans. This resulted in capacity utilization of 70.28 percent in 2023. The change in sales mix resulted in PABC’s GP margin reaching its highest level of 38.74 percent in 2023. In absolute terms, gross profit strengthened by 61.70 percent in 2023. Unprecedented level of inflation as well as workforce expansion to 204 employees resulted in elevated payroll expense which drove up administrative expense by 61.1 percent in 2023. Distribution expense registered 55.1 percent spike in 2023 due to improved export volumes which culminated into higher freight charges, export surcharges & commission and other logistics charges. Other expense mounted by 31.54 percent year-on-year in 2023 on account of higher profit related provisioning, exchange loss and generous donations. Other income improved by 106.34 percent in 2023 due to higher interest income. All these factors translated into 70.11 percent bigger operating profit in 2023 with OP margin of 30.51 percent. Finance cost spiraled by 75.75 percent in 2023 on account of higher discount rate and increased short-term borrowings. However, gearing ratio slid to 38 percent on account of higher un-appropriated profits which drove up the equity. Net profit rose by 85.67 percent year-on-year to clock in at Rs.5017.836 million in 2023 with EPS of Rs.13.9 and NP margin of 25.42 percent.

In 2024, PABC’s topline picked up by 16.88 percent to clock in at Rs.23,067.77 million. This was on account of improved sales volume of cans coupled with upward revision in prices. During the year, the company produced 972.11 million cans, up 15.26 percent year-on-year. This translated into capacity utilization of 81.01 percent in 2024. Cost of sales surged by 21 percent in 2024 on the back of supply chain disruptions, border closures, heightened energy tariff and elevated commodity prices. Gross profit ticked up by 10.24 percent in 2024, however, GP margin inched down to 36.53 percent. Administrative expense posted a marginal growth of 7.75 percent in 2024 on the back of higher payroll expense as the company expanded its workforce from 204 employees in 2023 to 240 employees in 2024. Distribution expense surged by 101.44 percent in 2024 particularly on account of higher export commission, marketing expenses as well as freight & other logistics charges incurred during the year. Export sales constituted 62.66 percent of the total sales of PABC in 2024 versus its contribution of 59.55 percent in the sales mix in the previous year. No exchange loss, donations and ECL on trade debts in 2024 resulted in 13.50 percent downtick in other expense. Conversely, other income strengthened by 376.79 percent in 2024 and unlike previous years, it outweighed other expense. Superior other income was the result of dividend income from mutual funds, unrealized gain recorded on the re-measurement of investments in mutual funds and capital gain on mutual funds. Besides, improved profitability on bank deposits due to higher discount rate also pushed up other income in 2024. PABC recorded 29.21 percent higher operating profit in 2024 with OP margin attaining its optimum level of 33.73 percent. Finance cost escalated by 42.24 percent in 2024 due to higher discount rate and increased short-term borrowings. However, increased un-appropriated profit resulted in higher equity which pushed down gearing ratio to 36 percent in 2024. Tax expense surged by 129.30 percent in 2024 as the company’s export income is now being treated under normal tax regime instead of presumptive tax regime. Net profit improved by 21.65 percent to clock in at Rs.6104.198 million in 2024. This translated into EPS of Rs.16.9 and NP margin of 26.46 percent in 2024.

In 2025, PABC recorded year-on-year growth of 4 percent in its net sales which clocked in at Rs.23,992.41 million. This mainly came on the back of 10 percent growth recorded in local sales volume during the year. The closure of Afghan border resulted in a decline in export sales to Afghanistan and Central Asian markets. In 2025, export sales constituted 58.41 percent of PABC’s net sales versus its shares of 62.66 percent in the previous year. Cost of sales surged by 10.37 percent in 2025 due to the withdrawal of export rebate on aluminum coil by the Chinese government which significantly raised the prices. The effect of this cost hike could not be passed on to the customers, resulting in a thinner GP margin of 32.65 percent in 2025. In absolute terms, gross profit deteriorated by 7 percent in 2025. Elevated freight cost, higher salaries of sales force and greater rent expense was offset by considerably lesser marketing expense and export commission, resulting in a stable distribution expense in 2025. Administrative expense surged by 7.10 percent in 2025 due to higher payroll expense and outsourced contractual staff expense incurred during the year. Other expense mounted by 178.45 percent in 2025 due to impairment allowance worth Rs. 1169.872 million booked on slow moving inventory. This was because certain goods manufactured for export purpose couldn’t be delivered due to cross border tensions. Other expense was conveniently offset by 5.55 percent stronger other income recognized during the year which was the result of the company’s prudent investment decisions. Operating profit dipped by 20.66 percent in 2025 with OP margin nose-diving to 25.73 percent. Finance cost plunged by 18.64 percent in 2025 due to monetary easing. Despite higher outstanding debt, gearing ratio also dwindled to 33 percent in 2025 due to higher un-appropriated profit. PABC posted net profit of Rs.5216.181 million in 2025, down 14.55 percent year-on-year. This translated into EPS of Rs.14.44 and NP margin of 21.74 percent in 2025.

Recent Performance (1QCY26)

During the first quarter of the ongoing calendar year, PABC recorded 18.71 percent year-on-year decline in its net sales which clocked in at Rs.3779.86 million. This came on the back of a massive slump in export sales during the period on the back of closure of Pak-Afghan border since October 2025. This led to suspension of export sales to Afghanistan and Central Asian markets. Local sales improved by 11.8 percent in 1QCY26, however, couldn’t offset the negative variance created by export sales. In absolute terms, gross profit dipped by 5 percent in 1QCY26, however, GP margin improved from 31 percent in 1QCY25 to 36.31 percent in 1QCY26 due to inventory revaluation gain emanating from increase in London Metal Exchange (LME) prices, a variable benchmark. Decline in export sales volume resulted in 12.20 percent downtick in administrative expense and 54.90 percent drop in distribution expense in 1QCY26. Other expense surged by 10 percent during the period under consideration likely due to impairment allowance booked on slow moving inventory due to geopolitical tensions which possibly impeded the company to deliver its export orders. Other expense was completely offset by other income of Rs.585.04 million recorded in 1QCY26 which largely comprised of income from financial assets. Operating profit ticked up by 4.49 percent in 1QCY26 with OP margin clocking in at 40.86 percent versus OP margin of 31.79 percent recorded in 1QCY25. Through monetary easing and discharge of external liabilities, PABC was able to curtail its finance cost by 22.34 percent in 1QCY26. The company continued to benefit from its operations in the Special Economic Zone and hence no current tax provision was recorded in 1QCY26. Net profit enhanced by 8.70 percent to clock in at Rs.1388.676 million in 1QCY26. This translated into EPS of Rs.3.85 and NP margin of 36.74 percent in 1QCY26 versus EPS of Rs.3.54 and NP margin of 27.47 percent recorded in the comparative period of last year.

Future Outlook

Currently, Afghanistan is the largest export market of PABC; however, recurring tensions at Afghan border and growing production capacity in the Central Asia has taken a toll on the company’s export sales. With new targeted geographical markets, the company can diversify its export sales. The company can also target new players in the local market to boost its local sales. Lately, the local market demonstrated stability due to increased emphasis on recyclable and sustainable packaging solutions by the leading beverage industries. This serves as a positive omen to enhance local sales.

The outlook remains uncertain due to ongoing tension in the Middle East, which if prolongs, will result in historic high oil prices, supply chain disruptions, elevated freight charges, rising operational cost and high margin pressure. Global aluminum prices are also contingent on these conditions and are experiencing significant volatility in the current scenario.

The company is also focusing on improving its operational efficiency and strengthening partnership with suppliers to mitigate cost pressure and ensure superior financial performance.

The latest IMF country report lays bare the scale of that dependence. By FY27, cumulative revenues from Petroleum Levy (PL), and the newly introduced carbon levy (CL) are projected to touch nearly Rs1.8 trillion, more than six times the level seen just five years ago. Excluding customs duties and import-stage taxes, petroleum products are quietly turning into one of the federal government’s most reliable revenue engines.

The shift has been dramatic. A decade ago, the petroleum levy averaged less than Rs10/litre on motor gasoline and high-speed diesel (HSD). Today, the IMF framework effectively envisages PL averaging close to Rs100/litre by FY27. Add the carbon levy, expected to rise to Rs5/litre from the current Rs2.5/litre, and the tax burden embedded in fuel prices becomes difficult to ignore.

The implications are straightforward. Even if global oil prices soften materially, retail petroleum prices may not provide proportionate relief to consumers. Islamabad increasingly lacks fiscal space to pass through lower international prices in full. Every decline in crude prices now creates temptation to absorb the benefit through higher levy collections instead.

That reality has already been visible over the past two years. As global oil prices eased from post Ukraine-war highs, petroleum levy rates rose aggressively. The result was a sharp divergence between international price trends and domestic consumer relief. Petroleum taxation effectively became a fiscal shock absorber.

The IMF programme, particularly under the Resilience and Sustainability Facility (RSF), reinforces this direction. The logic is not entirely without merit. Fossil fuel consumption carries environmental and externality costs, and carbon pricing mechanisms are increasingly becoming part of global policy architecture. Pakistan’s adoption of a carbon levy is therefore consistent with broader IMF-backed climate financing frameworks.

However, the speed and scale of reliance raise important questions.

At nearly Rs1.7 trillion, petroleum levy alone is set to become one of the single largest federal tax streams. Unlike direct taxation, however, fuel levies are inherently regressive. They cascade across transport, logistics, food, manufacturing, and household energy costs. In an economy where inflationary scars remain fresh and real incomes compressed, the room to keep extracting more from petroleum consumers is not infinite.

More importantly, the FY27 revenue arithmetic leaves little margin for slippage elsewhere.

The same IMF framework projects provincial tax revenues to rise from roughly Rs1.26 trillion to Rs1.94 trillion within two years. Embedded within that target is nearly Rs430 billion in additional provincial tax mobilisation measures. That is an extraordinarily ambitious expectation, especially given the historical weakness in provincial tax administration, agricultural taxation inertia, and fragmented enforcement capacity.

If provincial revenues underperform, the pressure inevitably shifts back to federally controlled revenue handles. Petroleum taxation then becomes the path of least resistance.

That is where the real risk lies.

If international oil prices remain elevated, Islamabad’s flexibility to keep increasing PL and CL levels narrows considerably without triggering political and inflationary backlash. But if other revenue assumptions fail simultaneously, the fiscal hole could widen rapidly. In effect, the government may find itself trapped between IMF targets on one side and consumer affordability on the other.

Pakistan’s petroleum tax story is therefore no longer merely about fuel pricing. It is increasingly about the state’s growing dependence on a narrow, politically sensitive, consumption-based revenue stream to hold together an already stretched fiscal framework.

And that dependence is becoming harder to unwind with every passing year.

A convenient assumption, not a serious one: banks are visible, regulated and easy to pressure; circulars can be issued, targets can be assigned, concessional schemes can be announced, and disbursement numbers can be reported. The state gets activity without necessarily confronting whether the instrument matches the problem. The system gets movement, or at least the appearance of it, which is often enough for the next review meeting.

But lending is not investment. A loan is not risk capital;a refinance scheme not an industrial policy. And a credit guarantee, useful as it may be in the right context, is not a substitute for a functioning equity market.

This distinction matters because Pakistan keeps designing debt instruments for problems that were never debt problems to begin with. Banks can finance working capital, inventory, receivables, collateral-backed assets and established borrowers with visible repayment capacity. That is their role, and in most cases that is exactly what they should be doing.

Banks are custodians of depositor money, not venture capital funds with branch networks. Their liabilities are regulated, confidence-sensitive and largely short-term; their survival depends on prudence, liquidity and public trust. A banker refusing to finance an untested technology, a speculative export market, or a business model still trying to discover demand may not be displaying cowardice. He may simply be doing banking.

Expecting banks to take venture-style risk with depositor money is not reform. It is confusion dressed up as ambition.

The real issue is that Pakistan increasingly wants banks to finance uncertainty itself. Many of the sectors now described as national priorities do not merely need cheaper loans; they need capital that can absorb delay, volatility, experimentation and failure before cash flows become predictable. Climate adaptation, cold chains, agri-processing, technology adoption, logistics platforms, export discovery and frontier manufacturing cannot always be built through repayment schedules designed for businesses that are already bankable.

Debt works when repayment capacity exists. Investment works when repayment capacity still has to be created.

Pakistan has spent years talking about access to credit while avoiding the harder question of access to investment capital. Refinance schemes reduce borrowing costs, markup subsidies make loans cheaper, credit guarantees reduce part of the lender’s loss, and directed lending targets push banks into politically preferred sectors. None of this is irrelevant,but all of it remains inside the debt frame.

That frame does not answer the central question: who absorbs the first layer of risk before a sector becomes bankable?

The textbook answer is equity. Businesses with uncertain cash flows, long gestation periods, technology risk and market-discovery risk should rely more on equity than debt because debt demands scheduled repayment, while equity absorbs volatility in exchange for upside. That is correct in theory. It is also weak as a practical answer in Pakistan.

The domestic equity market is shallow, venture capital is thin, private equity is limited, and pension and insurance pools have not become serious sources of long-duration productive capital. Institutional investors remain conservative, while family capital, though significant, usually stays within familiar sponsors, familiar sectors, real estate, trading and conventional industrial balance sheets. The result is that the capital Pakistan needs for transformation is precisely the capital it is least organized to mobilize.

So the answer cannot simply be to replace debt with equity. That is a classroom answer to an institutional problem.

The real answer is layered capital.

Pakistan needs to move beyond the plain distinction between debt and equity and start building structures where different pools of capital absorb different risks at different stages. Senior debt should enter where repayment capacity is visible; equity should absorb business risk; mezzanine capital can sit between the two; and guarantees, first-loss reserves, insurance pools, concessional capital and development finance can reduce specific risks that private investors cannot carry alone. This is not financial engineering for decoration. It is how incomplete markets are built.

A cold-chain platform may be too risky for pure bank debt at inception, but viable if equity absorbs early commercial uncertainty, banks finance assets once cash flows stabilize, and a development institution shares a capped tail-risk layer. A climate fund may not need the state as investor, but it may need partial downside protection to attract institutional capital. A processing cluster may not be bankable on day one,but may become bankable once equity takes the first risk and debt enters after performance has been demonstrated.

That is the missing discipline: capital sequencing.

Debt should not be forced into first-loss positions where the business is still discovering its economics. Equity should not be expected to enter frontier sectors without any protection against excessive downside. Public institutions should not replace private investors, but they may need to make specific risks investable.

This is where an equity guarantee becomes relevant.

The phrase should make people nervous, especially in Pakistan. Any instrument that appears to protect private investors from losses deserves suspicion in a country with a long record of subsidy capture, elite access, politically directed finance and public risk being quietly transferred to private balance sheets. But suspicion is not an argument against the instrument; it is an argument for hard design.

An equity guarantee is not a guarantee of profit. It should not protect investors from poor judgment, rescue weak funds, underwrite connected sponsors, or flatter fashionable sectors with public money. Properly designed, it is a capped risk-sharing instrument that absorbs a defined portion of downside losses on an equity portfolio or fund, so private capital can enter sectors where equity is the right form of capital but perceived risk remains too high.

The structure is everything. Investors must lose money first, retain meaningful exposure, conduct their own due diligence, and remain accountable for investment selection. The guarantee should activate only beyond predefined thresholds, remain subject to a hard cap, and apply at portfolio level rather than becoming a bailout window for individual failed investments. Gains should be netted against losses, while fraud, negligence, related-party abuse, weak governance and breach of eligibility conditions must sit outside cover.

In simple terms, the instrument should not remove risk; it should redistribute one narrow layer of risk to crowd in investment that would otherwise not move.

That is not exotic. Credit guarantees already share lender risk, export credit agencies share trade risk, and blended finance structures use concessional or junior-risk layers to mobilize commercial capital into infrastructure, climate and development sectors. The principle is familiar: where private capital will not move because early-stage risk is too large, public risk-sharing can help create the market.

The test should be ruthless. An equity guarantee should be used only where debt is structurally inappropriate, equity is commercially necessary, and private capital will not enter without limited downside protection. If a business can raise normal debt or equity, it should not qualify. If the economics are weak, it should not qualify. If additionality cannot be demonstrated, it should not qualify.

Otherwise, it will become another subsidy machine with better vocabulary.

The objective is not to replace bank debt with guaranteed equity, which would merely move the old mistake into a new container. The objective is to stop pretending that one type of capital can solve every investment problem.

Pakistan needs banks, but banks are not the whole financial system. It needs debt, but debt cannot absorb every form of uncertainty. It needs equity, but equity will not enter difficult sectors simply because policy documents call them strategic. Above all, it needs public institutions that understand the difference between subsidizing failure and sharing specific risks to build markets.

Until Pakistan learns to distinguish between lending, investing and risk-sharing, it will keep designing credit schemes for problems that were never credit problems in the first place.

The notable number is imports, which stood at USD5.97 billion in April — the highest since August 2022.

The increase is mainly due to rising oil prices, as energy-related import bills are surging. Although LNG imports remain much lower due to non-availability, overall imports are still reaching the dangerous levels seen in 2022. Given PBS imports of USD6.5 billion in April, it is expected that SBP’s import bill may hover around USD6.5 billion in May.

The oil bill, with zero LNG imports, stood at USD1.8 billion — the highest since August 2022 — while petroleum product and crude imports are at record-high levels. The increase in imports is not confined to the oil bill.

Transportation imports in April stood at USD397 million, the highest ever, although car sales are not at record levels. The share of high-value cars is growing, and CBU car imports stood at USD47 million, mainly due to the rising share of imported EVs, particularly BYDs.

Growing imports are not a good sign, especially when exports are hovering at low levels. In the first half of 2022, exports were relatively higher, particularly textile exports. Later, in parts of 2024 and 2025, food exports performed well due to the one-off rice bonanza. Now, both food and textile exports are relatively weak.

That is why the goods trade deficit is ballooning. It reached USD3.4 billion — the highest since June 2022. The goods trade deficit is up by 44 percent month-on-month and 29 percent year-on-year.

The impact is partially diluted by better performance in the services trade balance, which remained in marginal surplus in both March and April. Services exports continue to maintain robust growth momentum, rising by 18 percent in 10MFY26 to USD8.2 billion. Both ICT and other business services exports are growing at over 20 percent.

Combined, the two are up by 23 percent in 10MFY26 to USD5.6 billion — almost two-fifths of textile exports and significantly higher than food exports.

Overall, the goods and services trade deficit is up by 22 percent to USD29.0 billion.

Better services exports are therefore not enough to completely offset the impact of the growing goods trade deficit, which is up by 26 percent in 10MFY26 to USD26.9 billion.

Goods imports stood at USD52.7 billion, up by 8 percent, while goods exports declined by 5 percent to USD25.8 billion in 10MFY26.

The primary income balance remained almost unchanged, down by 4 percent to USD7.3 billion. The real gain is coming from inward home remittances, which continue to grow from a higher base. Remittances are up by 8 percent to USD33.9 billion in 10MFY26, with more than half coming from GCC countries.

The growing tension in the Middle East is likely to weigh on the medium-term outlook for remittances, especially from the UAE.

Pakistan’s economy is faring better in 2026 compared to 2022 largely due to the exceptional performance of home remittances. In 10MFY26, remittances are 46 percent, or USD11 billion, higher than in 10MFY23.

Any dip in remittances, at a time of growing imports and stagnating goods exports, could be devastating. Hence, the balance of payments, and in turn the broader economy, depends heavily on how home remittances perform next year.

The outlook is not rosy. That is why SBP has altered its monetary policy stance and increased the policy rate by 1 percentage point. It may raise rates further in the next policy review, as inflation is creeping up to 13–15 percent in May and June.

However, SBP should also use the exchange rate as a second line of defense and allow the PKR to depreciate by a few percentage points to curb demand, especially in automobiles and other areas. The REER is already at 105.8 — the highest level since 2018.

In a nutshell, a combination of higher interest rates, exchange rate depreciation and curbs on non-essential imports is very much on the cards in the next fiscal year. Things are getting tough.

Initially, PKGS was engaged in converting paper and paperboard into packaging for consumer industry.

Over the years, the company has enhanced its facilities to provide variety of packaging solution to a number of consumer brands across industries. It is also a leading manufacturer of tissue paper products.

As of now PKGS is operating as a holding company and hence its performance is largely determined by the performance of its group companies – within and outside Pakistan.

Pattern of Shareholding

As of December 31, 2025, PKGS has a total of 89.380 million shares outstanding which are held by 3782 shareholders. Associated companies, undertakings and related parties have the majority stake of 50.39 percent in the company. This category is mainly dominated by IGI Investments (Pvt.) Limited with 29.88 percent shares.

Local general public accounts for 28.66 percent of PKGS’s shares. Modarabas and Mutual funds account for 6.67 percent of the company’s shares while directors, CEO, their spouse and minor children have 5.78 percent shares.

Around 2.13 percent of the company’s shares are held by foreign companies and 1.86 percent by insurance companies. The remaining shares are held by other categories of shareholders.

Historical Performance (2019-24)

PKGS’s topline rode an upward trajectory over the period under consideration. On the contrary, its bottomline slid thrice during the period i.e. in 2019, 2022 and 2024. The company registered net loss in 2024. PKGS’s gross and operating margins inclined until 2023 followed by a drastic fall in 2024. In 2025, gross margin ticked up while operating margin continued to plunge. Conversely, its net margin followed the same trajectory as its bottomline. The detailed performance review of the period under consideration is given below.

In 2019, PKGS’s topline grew by 15 percent year-on-year to clock in at Rs.60,905.85 million. This was on account of significant improvement in the core manufacturing operations of PKGS.

Gross profit enlarged by 51.16 percent year-on-year in 2019 with GP margin rising up from 12.73 percent in 2018 to 16.73 percent in 2019. This was mainly on account of effective cost control mechanism put in place by the company.

Investment income dropped by 30.11 percent year-on-year in 2019 due to decline in dividend income from Nestle Pakistan Limited and Tetra Pak Pakistan Limited.

Other income grew by 325.22 percent in 2019 as a result of liabilities no longer payable written back. Administrative expense and distribution expenses surged by 10.76 percent and 6.75 percent respectively in 2019. This was the consequence of higher payroll expense, freight & distribution as well as advertising and promotion expense incurred in 2019. Impairment of investment pushed up other expense by 92.81 percent in 2019.

PKGS recorded 48 percent bigger operating profit in 2019 with OP margin growing from 7.55 percent in 2018 to 9.71 percent in 2019. Due to higher discount rate and increased long-term borrowings, finance cost grew by 75.28 percent in 2019.

This coupled with the higher effective tax rate of 85.65 percent in 2019 versus 30.82 percent in 2018 pushed the net profit down by 76 percent in 2019 to clock in at Rs.278.06 million. This translated into EPS of Rs.1.71 in 2019 versus EPS of Rs.10.34 posted in 2018.

NP margin also plummeted from 2.19 percent in 2018 to 0.46 percent in 2019.

In 2020, performance of manufacturing operations remained vigorous resulting in 6.69 percent topline bigger topline to the tune of Rs.64.981.48 million recorded by PKGS. Improved pricing and better volumes along with cost control resulted in GP margin of 20.38 percent in 2020 with Gross profit mounting up by 30 percent.

Operating expense remained in check during the year mainly on account of significantly lesser travelling charges and advertisement & promotion expense incurred during the year.

PKGS operating performance was further strengthened by a massive growth in share of profit from associates and joint ventures which clocked in at Rs.340.21 million in 2020 versus Rs.5.39 million in the previous year.

On the downside, investment income slid by 63.29 percent in 2020 primarily due to lower dividend income from Nestle Pakistan Limited.

Lesser liabilities written back during the year drove other income down by 38.95 percent in 2020. Other expense slipped by 34.46 percent in 2020 due to lower impairment booked on investment. PKGS registered 44.42 percent bigger operating profit in 2020 with OP margin rising up to 13.14 percent.

Finance cost shrank by 13 percent in 2020 due to low discount rate as well as lower running finances obtained during the year.

All these factors culminated into a bottomline growth of 1531 percent in 2020. The company’s net profit clocked in at Rs.4,535.70 million in 2020 with NP margin of 6.98 percent and EPS of Rs.47.44.

2021 was another pleasant year for PKGS with net revenue registering stellar growth of 23.61 percent over the last year to clock in at Rs. 80,322.30 million. This was particularly on the back of sale of goods manufactured by the company on its own, High cost of sales and services kept GP margin in check which inched up to 20.8 percent in 2020 despite 26.18 percent increase in gross profit.

Operating expense grew in line with inflation and also because of increased payroll expense as the number of employees grew from 3228 in 2020 to 3271 in 2021.

The company also incurred higher advertisement and freight expense in 2021. PKGS’s operating profit posted 42.80 percent rise in 2021 mainly on the heels of a massive growth in other income (reversal of impairment on fixed assets and associate), superior investment income and hefty share of profit from associates recognized during the year.

OP margin grew to 15.18 percent in 2021. Low discount rate coupled with better credit management resulted in 25 percent lower finance cost incurred during the year. This translated into year-on-year bottomline growth of 57.64 percent in 2021. PKGS’s net profit clocked in at Rs.7150.15 million in 2021 with EPS of Rs.71.41 and NP margin of 8.90 percent.

In 2022, PKGS’s topline boasted a staggering 51.76 percent year-on-year growth to clock in at Rs.121,893.59 million. This was mainly on account of better core operations of the company.

During the year, all the categories of PKGS’s core operations i.e. paper & paperboard produced, paper & paperboard converted, plastics converted and inks produced witnessed considerable improvement.

High inflation, energy tariffs and escalated cost of raw materials didn’t let the company realize any growth in the GP margin which stayed at the last year level of 20.80 percent. This was despite 51.69 percent year-on-year rise recorded in PKGS gross profit in 2022.

The company’s investment income also buttressed its financial performance in 2022 as dividend income from its long-term investments grew by 28.85 percent year-on-year.

Other income also registered a tremendous 435 percent year-on-year rise in 2022 mainly on the back of bargain purchase gain on the acquisition of its subsidiary, Tri-pack Films Limited (TPFL). Higher scrap sales and WPPF provision written back also majorly contributed in the growth of PKGS’s other income in 2022.

Share of profit from associates and joint ventures declined by 62.85 percent in 2022.

The company also booked net impairment loss on financial assets which included amount due from Packages Lanka (Private) Limited and Flexible Packages Converters (Proprietary) Limited in respect of management fee receivable.

Other expense also mounted by 168 percent in 2022 on the back of exchange loss incurred during the year as well as impairment booked on the assets of Flexible Packages Converters (Proprietary) Limited. All these factors culminated into 57.17 percent higher operating profit recorded by PKGS in 2022 with OP margin slightly moving up to clock in at 15.73 percent.

Finance cost mounted by 180.37 percent year-on-year in 2022 on account of high discount rate and also because of a whopping increase in running finances and long-term finances obtained during the year.

Increased borrowings during the year are also reflected in the company’s gearing ratio jumping up from 40 percent in 2021 to 51 percent in 2022. This coupled with the higher effective tax rate of 41.4 percent in 2022 versus 25.57 in the previous year translated into 2.38 percent year-on-year erosion in PKGS net profit in 2022.

Net profit stood at Rs.6,979.83 million in 2022 with EPS of Rs.72.12 and NP margin of 5.73 percent.

2023, despite all the challenges it carried along, proved to be welcoming for PKGS as its topline rose by 28.78 percent year-on-year to clock in at Rs.156,972.08 million. This was particularly on the back of local sales of goods and services by the company.

Improved core operations of the company coupled with the upward price revisions drove up its gross profit by 45.58 percent in 2023 with GP margin climbing up to 23.51 percent.

Administrative & distribution expenses surged by 26.41 percent and 50.86 percent respectively in 2023 on account of inflationary pressure and increased operational activity.

During the year, the company hired additional human resources which took the tally up from 3,264 in 2022 to 4,051 in 2023. This considerably drove up the payroll expense. Moreover, higher advertisement & promotion expense as well as freight & distribution charges also had a great say in driving up the operating expense in 2023.

Other expense dipped by 10 percent in 2023 as no impairment was booked on the assets of Flexible Packages Converters (Proprietary) Limited. Other income improved by 32.72 percent in 2023 predominantly due to bargain purchase gain recognized on the acquisition of subsidiary, Hoechst Pakistan Limited (HPL), formerly known as Sanofi-Aventis Pakistan Limited.

Net impairment loss on its financial assets magnified by 29.93 percent in 2023. Its investment income (dividend income) slid by 17.15 percent in 2023. This was because during the year, Flexible Packages Converters (Proprietary) limited was sold to a third party as it was unable to meet its liabilities towards the creditors. Hence, the group derecognized the net assets of FPC and didn’t expect any future inflow from this investment.

During the year share of profit from associates & joint ventures grew by 14.91 percent. PKGS recorded 50.93 percent higher operating profit in 2023 with OP margin of 18.43 percent.

Finance cost escalated by 86.46 percent in 2023 on account of monetary tightening and increased borrowings majorly to acquire shares of HPL. Gearing ratio dipped to 49 percent in 2023 due to higher equity on the back of increased un-appropriated profits and FVOCI reserves.

Net profit grew by 48.90 percent in 2023 to clock in at Rs.10,392.98 million with EPS of Rs.100.18 and NP margin of 6.62 percent.

PKGS recorded 12.61 percent greater topline to the tune of Rs.176,761.28 million in 2024. Sales of goods and services posted improvement during the year. Cost of sales surged by 18.84 percent in 2024 mainly on the back of higher energy tariff, inflationary pressure, hefty cost of raw materials and elevated depreciation expense on the back of capital expenditure undertaken in the past years.

Inferior sales mix and the inability to pass on the impact of cost hike to the consumers pushed gross profit down by 7.68 percent in 2024 with GP margin falling down to 19.27 percent.

Other income didn’t prove to be favorable either as it eroded by 62.38 percent in 2024 due to high-base effect as the company recorded bargain purchase gain on the acquisition of HPL in the previous year. Investment income (dividend income) also slumped by 38 percent in 2024. Share of profit of associate and joint ventures mounted by 44.40 percent in 2024.

Operating profit tapered off by 31.56 percent in 2024 with OP margin sliding down to 11.20 percent. Finance cost multiplied by 35.63 percent in 2024 due to higher discount rate and increased outstanding borrowings.

The company obtained loan for capital expenditure and to make strategic investment in investments in StarchPack (Private) Limited and Packages Trading FZCO. Gearing ratio jumped up to 56 percent in 2024. PKGS recorded net loss of Rs.1378.97 million in 2024 with loss per share of Rs.32.55.

In 2025, PKGS’s net sales ticked up by 9.32 percent to clock in at Rs.193,227.71 million. This was the result of favorable sales mix achieved during the year.

Local sales of the company’s own manufactured goods was the main revenue driver for the company in 2025. Increased sales volume and superior sales mix allowed PKGS to record 15.83 percent higher gross profit in 2025 with GP margin bouncing to 20.42 percent.

Higher payroll expense, professional services charges, computer charges, training expense as well as depreciation expense pushed up administrative expense by 11.14 percent in 2025.

The company streamlined its workforce from 4834 employees in 2024 to 4665 employees in 2025. Distribution expense spiked by 22.97 percent in 2025 due to elevated salaries of sales force, higher freight charges and greater advertisement & promotion budget allocated for the year.

Other expense escalated by 118.70 percent in 2025 due to greater profit related provisioning as well as exchange loss, de-recognition of intangible assets (trademarks which were previously utilized under licensing agreement but then purchased), donations as well as unclaimed input tax written off during the year.

Other income deteriorated by 29.27 percent due to significant decline in insurance claim for the recovery of loss due to business interruption.

Investment income strengthened by 95.43 percent in 2025 due to increased profitability from PKGS’s long-term investments including NESTLE, SYS, Coca Cola and Pakistan Beverages Development Corporation Limited.

Together, other income and investment income wiped off PKGS’s other expense in 2025. Share of profit from associates also improved by 21.38 percent in 2025. PKGS recorded 5.57 percent uptick in its operating profit in 2025, however, OP margin slightly ticked down to 10.82 percent.

Despite increased borrowings, finance cost plummeted by 20.47 percent in 2025 due to monetary easing. Gearing ratio inched up to 59 percent in 2025. The company recorded net profit of Rs.260.587 million in 2025 with NP margin of 0.13 percent.

However, after taking into account the non-controlling interest of Rs.2096.893 million, the loss attributable to the owners of the company stood at Rs.1836.306 million. This resulted in loss per share of Rs.20.55 in 2025.

Recent Performance (1QCY26)

During the first quarter of CY26, PKGS’s net sales ticked up by 6.74 percent to clock in at Rs.53,098.36 million. This was on the back of superior sales volume and greater focus on high-margin products. This coupled with cost control measures implemented during the period resulted in 23.18 percent superior gross profit in 1QCY26 with GP margin clocking in at 23.67 percent versus GP margin of 20.51 percent recorded in 1QCY25.

Increased production operation and greater sales volume resulted in 21.32 percent spike in administrative expense and 22.52 percent spike in distribution expense in 1QCY26. Other expense dipped by 35.32 percent in 1QCY26 likely due to high-base effect as the company de-recognized its intangible assets in the previous year. Other income grew by 15.74 percent in 1QCY26 likely due to greater scrap sales and amortization of deferred government grant.

Share of profit from associates tapered off by 10.40 percent in 1QCY26. Together, other income, share of profit from associates and investment income were able to offset PKGS’s other expense in 1QCY26. This resulted in 28.49 percent stronger operating profit in 1QCY26 with OP margin clocking in at 12.74 percent versus OP margin of 10.58 percent recorded in the comparative period.

Finance cost dipped by 3.83 percent due to lower discount rate. PKGS recorded 573.43 percent higher net profit to the tune of Rs.1265.205 million in 1QCY26 with NP margin of 2.38 percent. This was against the NP margin of 0.38 percent recorded in 1QCY25. After accounting for non-controlling interest, PKGS posted EPS of Rs. 7.73 in 1QCY26 versus loss per share of Rs.3.39 posted in 1QCY25.

Future Outlook

Amidst highly challenging and competitive environment, the company is thriving on the heels of its core function of providing packaging solutions across the industries. PKGS is also taking tremendous benefit from the superior performance of its subsidiaries, investments and joint ventures.

The associated companies of PKGS are serving across various sectors of the economy, providing their holding company the benefit of income diversification. Moreover, its foreign based subsidiaries will continue to be the source of exchange gain for the company.

The company has recently made injection of Rs.3 billion into StarchPack (Private) Limited and Rs.8 billion in Bullehshah Packaging Private (Limited) to improve the capital structure of both the companies. This will greatly improve the ROI from these companies.

The GST rate of 18 percent is already very high, and the incentive to evade it is strong enough for new informal players to emerge or for existing ones to gain scale.

On top of this, for items that fall under standard sales tax, there is an extra 4 percent levy on unregistered retailers and an additional 2 percent income tax on items subject to standard sales tax.

Since small retailers remain reluctant to enter the tax net, the formal manufacturer, or the consumer effectively either bears this additional 6.5 percent tax.

With over 90 percent of retailers in the country operating undocumented, this additional tax becomes a serious problem. They do not want to get registered. Nothing has worked on them in the past thirty years. The recent Tajir Dost scheme also failed miserably. In addition, even many registered players in the retail and wholesale value chain pay little to no tax.

All these penal taxes do is place the burden on formal players while giving an unfair advantage to informal operators. An almost 25 percent price delta is enough for undocumented manufacturers or importers to increase their market share.

Formal players cannot move away from small, unregistered wholesalers and retailers, as that would risk losing market share and shelf presence in most places. At the same time, they cannot fully pass on the higher cost to consumers, as competitors can undercut them in a price-sensitive market.

That is the challenge for GST collection in value-added form when enforcement measures are weak. Historically, penal taxes have not worked in Pakistan. The filer and non-filer distinction over the past decade failed to expand the tax net. The same is true for taxes on unregistered retailers.

One way to deal with this is to bring more consumable items into the Third Schedule of the Sales Tax Act. Currently, several items, including water, biscuits, coffee, ice cream, chocolates, juices, beverages, packaged tea and spices, soaps and shampoos, are part of the Third Schedule. Their retail prices are printed on the packaging, and sales tax on behalf of the value chain is collected upfront from the manufacturer. This reduces evasion and allows the government to collect GST from a market worth over Rs2.5 trillion.

On the other hand, items such as cooking oil, ketchup, milk and dairy products, infant formula and others remain under the standard sales tax regime, where tax is collected at various stages of the supply chain — manufacturers, distributors, retailers, and consumers. These layers add complexity, increase the cost of doing business, and when someone chooses to remain invisible in the value chain, others have to bear the brunt.

The issue is that retail prices are not required to be printed on the packaging for these items. This leaves consumers at the mercy of retailers, who can charge prices of their own choosing. In the value chain, undocumented discounts and under-declared taxable values not only make the system opaque but also create room for leakages, especially in small towns and villages.

The solution is simple: add the above-mentioned items to the Third Schedule to bring transparency to the value chain. This would protect consumers from overcharging, give formal players space to compete without being undercut by tax-evading operators, and help the government collect the full tax due.

It is a win-win situation, but the government must also think of more direct ways to bring retailers into the tax net.

Expanding the Third Schedule to include categories such as cooking oil, ketchup, milk and dairy products, infant formula, frozen foods, flour and noodles would benefit the government by increasing visibility across the retail value chain, improving GST collection, reducing leakages, and creating a fairer competitive environment for formal businesses.

For most families, chronic kidney disease does not arrive as a medical statistic. It often remains unnoticed until it reaches an advanced stage, turning a manageable health condition into a serious health and financial burden.

Globally, chronic kidney disease is now both a clinical and economic challenge. The latest global analysis estimates that around 788 million adults worldwide had chronic kidney disease in 2023, equal to about 14 percent of the adult population. It was the ninth leading cause of death globally, causing 1.48 million deaths in the same year.

For Pakistan, the problem is sharper because the disease is widespread but largely hidden. Some studies indicate chronic kidney disease prevalence of around 12–13 percent among adults. Yet most patients remain undiagnosed in the initial stages because routine screening is limited, awareness is low, and the disease is weakly integrated into primary healthcare. Many are identified only when they reach advanced disease and need dialysis.

That means the visible burden — patients in dialysis centres and hospitals — is only the tip of the iceberg. Beneath it is a larger economic burden: undiagnosed patients, delayed treatment, lost income, caregiver time, household debt, and preventable progression to kidney failure.

Chronic kidney disease becomes much more expensive as it gets worse. In the early stages, costs are mostly for tests, medicines, diabetes and blood pressure control, and regular check-ups. But once the disease reaches an advanced stage, the costs rise sharply because patients may need dialysis, hospital care, treatment for complications, and repeated travel for care.

This is where Pakistan ends up paying far more later because it fails to invest early. Chronic kidney disease can often be controlled early through basic steps such as managing blood pressure and diabetes, improving lifestyle, taking low-cost medicines, and doing simple blood and urine tests. These tests usually cost around PKR 2,500–3,500, so the bigger problem is not affordability but the lack of regular screening and awareness.

Once chronic kidney disease advances, the burden rises sharply: treatment becomes more complex, complications increase, dialysis may be needed, and costs can rise three to four times, along with more hospitalisations and productivity loss.

Dialysis is the most visible cost, but it is not the full story. Pakistan’s dialysis cost may appear lower than many developing countries. The estimated annual dialysis cost in subsidised settings is around $1,500–2,000 per patient, compared with annual costs of up to $20,000 or more in some developing countries. But a lower dollar cost does not mean treatment is affordable for Pakistani households.

With weak disposable incomes, even subsidised dialysis can be financially devastating. Families still pay for medicines, tests, transport, and repeated visits, forcing many to borrow, sell assets, cut essential spending, or even stop treatment. This is the human face of the economic burden. Chronic kidney disease does not only affect the patient. It rearranges the finances of the entire household.

Global evidence shows that lower chronic kidney disease spending in poorer countries does not mean a lower burden. It often means patients are diagnosed late, receive incomplete care, pay out of pocket, or never get treatment at all. That applies directly to Pakistan. The country may not be seeing the full cost of chronic kidney disease in official health spending because many patients never enter formal care, enter too late, or drop out because treatment is unaffordable. The economic burden is therefore not only what the state spends. It is also what households quietly lose.

The second major cost is productivity. Advanced chronic kidney disease reduces productivity. Patients may miss work, work fewer hours, or leave the workforce altogether, while family members often lose time and income providing care. In Pakistan, this burden is worse because many workers are informal and lack paid leave, insurance, or income protection. For daily-wage workers, dialysis can mean losing income for the day, while missing treatment can put their life at risk.

There is also a fiscal cost. Pakistan’s public health system is already stretched. Late-stage chronic kidney disease puts more pressure on hospitals, dialysis centres, emergency care, medicines, and subsidies, leading to expensive treatment instead of cheaper prevention and early diagnosis.

This is why chronic kidney disease should be part of Pakistan’s primary healthcare and non-communicable disease strategy, not treated only as a specialist kidney-care issue. The focus should be on early detection among high-risk groups such as people with diabetes, hypertension, heart disease, obesity, family history of kidney disease and older adults. The country does not need expensive universal screening to begin with. It needs routine testing for high-risk patients, better diabetes and blood pressure control, public awareness, affordable medicines, and financial protection for patients who need dialysis.

While prevention should remain the priority, Pakistan also needs to keep dialysis affordable for patients who reach kidney failure. Local manufacturers and suppliers, led by companies such as Renacon Pharma Limited, a Treet Corp company, have helped reduce dependence on imported dialysis inputs by producing haemodialysis concentrates and related renal-care products locally. This matters because local capacity can lower treatment costs, improve supply reliability, and help hospitals, charities, public programmes, and patients manage the burden more affordably.

That matters because every reduction in dialysis cost eases pressure on families and stretches limited public health resources further. But affordability at the dialysis stage should not distract from the larger economic point: the best way to reduce the burden is to prevent more patients from reaching dialysis in the first place.

The economic choice is clear: prevention is better than cure. The real question is not how many dialysis machines the country can add, but how many patients can be prevented from reaching dialysis in the first place — and how much financial pain can be reduced for those who still need it.

Pakistan’s chronic kidney disease burden is a hidden economic liability. The country saves too little by not screening early and pays far more later through late-stage treatment, lost labour, caregiver burden, and household poverty. The real cost of chronic kidney disease is not only what the country spends on kidney disease. It is what families lose because the disease is detected too late.

Pattern of Shareholding

As of June 30, 2025, SHEZ has a total of 9.663 million shares outstanding which are held by 815 shareholders. Local general public has the highest stake of 45.20 percent in the company followed by its directors, CEO, their spouse and minor children collectively holding 25.26 percent shares.

Around 19.93 percent shares of the company are held by NIT & ICP and 5.11 percent by joint stock companies. Pension funds account for 2.94 percent shares while Modarabas & Mutual funds hold 1.10 percent shares of SHEZ.

The remaining ownership is divided among other categories of shareholders.

Historical Performance (2019-25)

Over the period under consideration, SHEZ’s topline plunged in 2020, 2021 and 2024. Conversely, its bottomline slid in all the years except 2021 and 2025. In fact in 2020 and 2024, the company posted operating and net losses. SHEZ’s margins rode a downhill journey until 2020 followed by a rebound in 2021.

In 2022, gross margin posted a marginal uptick, while operating and net margins marched down. In 2023, gross and operating margins showed improvement while net margin continued to tumble.

In 2024, all the margins drastically declined followed by a phenomenal recovery in 2025. Gross and operating margins registered their peak level in 2025 (see the graph of profitability ratios).

The detailed performance review of the period under consideration is given below.

In 2019, SHEZ’s topline grew by a marginal 2.68 percent year-on-year to clock in at Rs.7704.10 million.

During the year, food and beverages sector posted a year-on-year decline of 4.7 percent on account of escalating macroeconomic imbalances such as hike in the global commodity prices particularly POL products, elevated energy tariffs, Pak Rupee depreciation and high discount rate. Moreover, as huge chunk of demand was met through imports, local players couldn’t rise. In 2019, SHEZ rebranded its juices segment with a new brand name of “Happy Farms”.

The company also introduced new packing line for its 1000 ml juice segment. Among all the categories SHEZ dealt in, jams and ketchups posted the highest fall in its capacity utilization which stood at 43 percent in 2019 versus 57 percent in 2018.

Cost of sales spiked by 14.19 percent year-on-year in 2019 mainly on account of higher prices of sugar, pulp, raw and packaging materials and utilities. Gross profit shrank by 27 percent year-on-year in 2019 culminating into GP margin of 19.88 percent versus GP margin of 27.95 percent recorded in 2018.

Administrative expense inched up by 1.70 percent year-on-year in 2019, however, curtailed advertising and promotion budget allocated for the year and streamlined freight charges on account of low sales volume pushed distribution expense down by 10.53 percent year-on-year in 2019.

Net other expense slid by 84 percent year-on-year in 2019 due to lesser product spoilage, lesser provisioning as well as higher sale of scrap.

Despite keeping a check on its expense, operating profit slumped by 58.34 percent year-on-year in 2019, translating into OP margin of 2.86 percent versus OP margin of 7 percent recorded in 2018.

Finance cost magnified by 74 percent year-on-year in 2019. This was on account of higher discount rate coupled with long-term loans obtained during the year. This drove SHEZ’s gearing ratio up from 15 percent in 2018 to 23 percent n 2019. Net profit slumped by 71.36 percent year-on-year in 2019 to clock in at Rs.113.07 million with EPS of Rs.12.87 versus EPS of Rs.44.94 posted in 2018.

NP margin also ticked down from 5.26 percent in 2018 to 1.47 percent in 2019.

Followed by the skimpy sales growth of 2019, came the two years of topline slide. In 2020, SHEZ’s topline nosedived by 5 percent year-on-year to clock in at Rs.7313.04 million. The primary reason was the country-wide lockdown on account of COVID-19 which halted the economic activity.

The shutdown of HORECA industry coupled with the closure of offices, educational institutions, recreational places malls etc put a severe dent on the demand of the company’s products.

Moreover, the imposition of 5 percent FED on juices, syrups and squashes in the federal budget of 2019-20 further watered down SHEZ’s net sales in 2019. Despite lower sales volume and thinner net sales, cost of sales inched up by 0.67 percent year-on-year in 2020 due to high inflation, elevated prices of raw and packaging materials as well as spiked utility charges.

Gross profit further weakened by 28.22 percent year-on-year in 2020, translating into GP margin of 15 percent. Distribution and administrative expense measured down by 14.89 percent and 2.60 percent respectively in 2020. This was due to a drop in employee count from 303 in 2019 to 289 in 2020 coupled with rationalized advertising and promotion outlay as well as lower freight cost due to abridged volumes.

Net other expense magnified by 112.18 percent in 2020 as SHEZ did higher provisioning for ECL and made lower scrap sales during the year.

The company made operating loss of Rs.95.68 million in 2020. The performance was further smashed by a steep 203.52 percent hike in finance cost as the company obtained greater amount of short-term loans to meet working capital requirements in 2020.

SHEZ’s gearing ratio further surged to 35 percent in 2020. The company posted net loss of Rs.235.78 million in 2020 with loss per share of Rs.26.84.

In 2021, SHEZ’s topline posted another 9.96 percent drop to clock in at Rs.6584.45 million.

While export sales demonstrated encouraging growth of 45 percent year-on-year in 2020 on account of robust volumes of cooked food range particularly juice packs, bottled juices, squashes and ketchups exported mainly to the Middle East and European markets.

However, it was offset by lackluster performance in the local market on account of lockdown. Gross profit grew by 27.16 percent year-on-year in 2021 due to price rationalization and cost control measures implemented during the year. GP margin was recorded at 21.23 percent in 2021.

Distribution and administrative expense plummeted by 3.98 percent and 14.74 percent respectively in 2021.

During 2021, the company further cut down its employee count to 270 which drove down the payroll expense. Lower travelling and conveyance charges as well as curtailed advertising and promotion expense overshadowed the growth of freight charges due to increased international sales.

Net other expense slipped by 34.74 percent year-on-year in 2021 due to lower royalty fee paid to Shezan Services (Private) Limited. SHEZ was able to boast operating profit of Rs.305.23 million in 2021, translating into OP margin of 4.64 percent. Finance cost diluted by 39.94 percent year-on-year in 2021 due to lower discount rate. Gearing ratio climbed up to 37 percent in 2021.

The company recorded net profit of Rs.122.98 million in 2021, culminating into EPS of Rs.12.73 and NP margin of 1.87 percent.

SHEZ’s topline noticeably recovered in 2022, posting a rebound of 24 percent year-on-year to clock in at Rs.8169.27 million. The growth was largely led by the juice category which posted encouraging rise in its turnover.

During 2022, SHEZ’s tetrapak segment produced 29.869 million dozen products, up 18 percent year-on-year. Russa-Ukraine crisis inflated the global commodity prices. This coupled with Pak Rupee depreciation proved to be a double whammy for the company in 2022.

Hike in the prices of tetrapak paper, POL products as well as energy tariff also took its toll on the cost of the company.

However, changes in the sales mix, higher volumes and price revisions slightly pushed the GP margin up to 21.71 percent in 2022 with 26.87 percent rise in gross profit in absolute terms.

Distribution and administrative expenses spiked by 43.26 percent and 17.67 percent respectively in 2022 due to high payroll expense and freight charges.

Net other expense inched down by 18.24 percent year-on-year in 2022 on account of foreign exchange gain, gain on disposal of fixed assets as well as higher scrap sales. High operating expense impeded the growth of operating profit which ticked up by a negligible 0.12 percent in 2022 with OP margin sinking to 3.74 percent.

Finance cost plunged by 4.12 percent year-on-year in 2022 despite higher discount rate as the company paid off its external borrowings during the year. This pushed the gearing ratio down to 33 percent in 2022. Unfortunately, the topline growth couldn’t trickle down to produce a healthy bottomline in 2022.

SHEZ’s net profit slid by 35 percent year-on-year in 2022 to clock in at Rs.79.92 million with EPS of Rs.8.27 and NP margin of 0.98 percent.

In 2023, SHEZ’s topline posted year-on-year growth, however with a considerably lower momentum of 7 percent to clock in at Rs.8745.42 million. Initially, the juices segment continued to perform better, however, after the imposition of 20 percent FED on sugary fruit juices, the volume went significantly down.

Overall, the demand remained stressed due to drastic rise in inflation and shrinkage in the purchasing power of consumers. The company also increased the prices of its products to pass on the impact of cost hike which further dented the demand.

Gross profit enlarged by 17.30 percent year-on-year in 2023 with GP margin further rising to 23.80 percent. Both distribution and administrative expenses multiplied by 12.94 and 12.71 percent respectively in 2023 due to higher payroll expense and POL prices. Net other expense shrank by 72.74 percent year-on-year in 2023 due to higher realized and unrealized exchange gain and scrap sales. Operating profit picked up by 47.73 percent year-on-year in 2023 with OP margin climbing up to 5.16 percent.

Finance cost gave a severe blow to SHEZ’s bottomline as it grew by 134.62 percent year-on-year in 2023 due to unprecedented level of discount rate and elevated external borrowings. SHEZ’s gearing ratio jumped up to 39 percent in 2023. High finance cost squeezed the bottomline by 40.18 percent year-on-year in 2023 to clock in at Rs.47.81 million with EPS of Rs.4.95 and NP margin of 0.55 percent.

After two successive years of topline growth, SHEZ recorded 6.75 percent year-on-year drop in its topline which clocked in at Rs. 8154.97 million in 2024. The imposition of 20 percent FED on juices, squashes and syrups resulted in heightened prices and reduced sales volume.

Cost of sales couldn’t be reduced proportionately due to higher input prices, elevated energy tariff and inflationary pressure. This resulted in 22.58 percent thinner gross profit recorded by the company in 2024 with GP margin slipping to 19.75 percent. Shrunken sales volume resulted in 5.12 percent lower distribution expense in 2024.

Conversely, administrative expense ticked up by 1.11 percent in 2024. Net other expense was recorded at Rs.84 million in 2024, up from Rs.8.95 million in the previous year. This was due to massive decline in other income in 2024. Squeezed other income is due to high base effect as the company recorded higher exchange gain in the previous year.

Conversely, the company recorded exchange loss in 2024. SHEZ recorded operating loss of Rs.33.91 million in 2024. Finance cost grew by 18.74 percent in 2024 due to higher discount rate while outstanding borrowings were settled to a great extent in 2024. The company recorded net loss of Rs.462.81 million in 2024 with loss per share of Rs.47.89.

In 2025, SHEZ’s sales inched up by 12.60 percent to clock in at Rs.9182.59 million. Both domestic and export sales posted growth in 2025. While improved macroeconomic backdrop supported local sales, superior export sales came on the back of product diversification and penetration into new export markets. Read-to-eat foods products, ketchups and tetra-pack juices were the star products in the export market.

The company also introduced premium product lines which improved its margins. Cost cutting measures such as installation of solar power plants enabled the company to keep a check on its cost which grew by 5.90 percent in 2025. This translated into 39.83 percent stronger gross profit in 2025. GP margin also jumped up to 24.52 percent in 2025.

Distribution expense grew by 6.26 percent in 2025 due to higher salaries of sales force as well as elevated outward freight charges. Administrative expense also mounted by 12.81 percent in 2025 due to hefty payroll expense on account of revision of minimum wage rate. Workforce was squeezed from 230 employees in 2024 to 219 employees in 2025.

Net other expense surged by 10.64 percent in 2025 due to higher provisioning done for WWF, WPPF and ECL as well as royalty paid to the related party (Shezan Services Private Limited). SHEZ posted operating profit of Rs.475.90 million in 2025 versus operating loss of Rs.33.91 million recorded in 2024. OP margin clocked in at 5.18 percent in 2025.

The company was able to drive down its finance cost by 42.79 percent in 2025. This was the result of monetary easing as well as settlement of outstanding liabilities during the year. Gearing ratio fell from 47 percent in 2024 to 37 percent in 2025. SHEZ posted net profit of Rs.163.05 million in 2025 with EPS of Rs.16.87 and NP margin of 1.78 percent.

Recent Performance (9MFY26)

During the nine month of the ongoing fiscal year, SHEZ’s topline strengthened by 6.10 percent to clock in at Rs.6505.13 million. The sales growth was supported by improvement in both local and export sales which was the result of effective pricing strategies, cost control measures, strengthening distribution framework and growing global footprint.

Local sales still form the greatest chunk of the company’s sales mix, however, export sales are also gaining traction mainly on account of the company’s growing acceptance in the Middle East, Europe, North America and the United Kingdom. Cost of sales inched up by 1.18 percent in 9MFY26, resulting in 22.48 percent stronger gross profit. GP margin also mounted from 23.11 percent in 9MFY25 to 26.68 percent in 9MFY26.

Distribution and administrative expense surged by 10 percent and 19.29 percent respectively during the period in line with the growth of the company’s operations.

Net other expense multiplied by 71.22 percent in 9MFY26 primarily on the back of increased provisioning done for WWF and WPPF. SHEZ posted 68.64 percent recovery in its operating profit in 9MFY26 with OP margin clocking in at 6 percent versus OP margin of 3.78 percent posted in 9MFY25.

Finance cost tumbled by 10.23 percent in 9MFY26 despite increased borrowings. This was due to lower discount rate. Net profit for the period was recorded at Rs.138.140 million, up 4661.81 percent year-on-year. This translated into EPS of Rs.14.30 in 9MFY26 versus EPS of Rs.0.30 posted in 9MFY25. NP margin took off from 0.05 percent in 9MFY25 to 2.12 percent in 9MFY26.

Future Outlook

The company’s keen interest to boost its export is an apt strategy in the face of deteriorating purchasing power of customers in the home market. The company has significantly leveraged the international markets of Germany, Canada, Saudi Arabia and the United Kingdom.

The company plans to install solar power plant at its Lahore factory after its successful commissioning at the Karachi and Hattar production facilities. This will reduce its reliance on the grid and will also mitigate cost pressure.

Downside risk includes supply chain disruptions due to the recent floods as key inputs such as sugar, fruits and vegetables are locally sourced. To mitigate this risk, the company is entering into advance procurement arrangements with its suppliers.

Another external risk that the company faces is the ongoing geopolitical tensions which can cause supply chain disruptions, reduced demand and cost hike.