Yet beneath those reassuring headlines lies a very different story. The electricity system that emerged from FY26 is structurally different from the one planners designed for. The fuel mix has changed, the demand profile has changed, and the cost of balancing the grid has changed with it.

National grid generation reached nearly 125 billion kilowatt hours during FY26, up just 1.5 percent from the previous year.

June generation stood at around 13 billion units, down 2 percent year-on-year, while actual generation remained about 3 percent below reference levels. Demand has undoubtedly recovered from the lows of recent years, but it still remains well below the peaks recorded in FY22.

The headline performer was hydel. At nearly 40 billion units, hydropower recorded its highest annual generation on record, accounting for roughly 31 percent of total electricity generation.

Hydel output exceeded reference levels by around 10 percent, providing the system with a substantial amount of low-cost electricity and preventing fuel costs from rising even further.

RLNG also staged a recovery after the severe disruption witnessed during the latter part of the fiscal year. Pakistan managed to secure additional LNG cargoes despite the uncertainty surrounding global gas markets and the regional conflict. RLNG’s share recovered to around 13 percent of generation.

But the recovery remained incomplete.

Even after the turnaround, RLNG generation still finished nearly 19 percent below reference, translating into almost 4 billion fewer units than originally planned. Pakistan’s most flexible source of thermal generation remained constrained precisely when the grid needed it the most.

That missing RLNG had to be replaced somehow.

The answer once again was imported coal.

Imported coal generation exceeded reference levels by roughly 43 percent during the year, producing nearly 4 billion additional units above planning assumptions. Coal’s share reached around 11 percent of total generation, not because demand surged unexpectedly, but because the grid increasingly required dependable thermal generation capable of supporting the evening ramp.

This is perhaps the defining electricity story of FY26.

For years, planners focused primarily on generating enough electricity. Increasingly, the challenge is becoming generating electricity at the right time.

Pakistan’s rapidly expanding base of behind-the-meter and off-grid solar continues to hollow out daytime demand. During sunny hours, the national grid supplies considerably less electricity than it did only a few years ago, even as overall electricity consumption has increased. Once the sun sets, however, demand returns abruptly, requiring conventional power plants to ramp up output within a very short period.

The duck curve that once seemed like a future concern has now firmly arrived.

Hydel has helped soften the impact. RLNG’s recovery prevented a more severe disruption. But neither was sufficient to eliminate the growing dependence on imported coal during critical hours. The system continues to dispatch more coal than envisaged, not because it is the cheapest option, but because it is increasingly one of the few options available.

The consequence has been visible in consumers’ bills. Fuel cost adjustments remained positive through much of the second half of FY26 as imported coal repeatedly exceeded reference generation while RLNG continued to underperform. The higher cost of balancing the system has increasingly found its way into monthly adjustments.

Operationally, the challenge remains equally apparent. The evening peak has become steeper, ramping requirements continue to increase, and system operators have less flexibility than planning assumptions envisage. Transmission constraints have eased compared to previous years but have not disappeared, meaning balancing the grid remains as much an operational exercise as a fuel management one.

The irony is difficult to ignore. Pakistan’s solar revolution has almost certainly reduced overall fuel imports and protected the country from a far larger energy shock during a year marked by geopolitical uncertainty. But it has simultaneously made operating the grid considerably more complicated. The problem is no longer producing enough electricity. It is producing the right electricity at the right hour.

FY26 may ultimately be remembered as the year Pakistan’s power sector adapted to that new reality. The next challenge will be building a system flexible enough to live with it.

The company has expanded into Thar coal with majority stakes in Thar Energy Limited and ThalNova Power Thar, both 330 MW mine-mouth lignite plants. To support growth, HUBC operates through two subsidiaries—HPSL for operations and maintenance, and HPHL for new investments—and also holds an 8 percent stake in Sindh Engro Coal Mining Company, which supplies coal to its Thar projects.

Past Performance FY15 was a transformative year for HUBC, with strong shareholder returns and a successful business turnaround. Despite a slight drop in load factors due to boiler maintenance, consolidated earnings rose by 48 percent year-on-year.

In FY16, earnings grew by 7.5 percent, but revenues fell 34 percent due to lower furnace oil prices, reduced generation bonuses, and lower electricity demand.

FY17 saw a significant drop in earnings, driven by higher maintenance costs at the Hub and Narowal plants, unfavorable exchange rates, and losses from early-stage TEL and CPHGC projects. Increased administrative expenses also contributed to a 9.2 percent decline in profits.

In FY18, earnings rose by 3 percent, despite lower revenues. This modest growth was due to reduced maintenance costs, although profits from Laraib were lower, and financing costs increased. Load factors at the Hub and Narowal plants dropped due to reduced electricity demand and maintenance work.

FY19 was challenging, with furnace oil-based generation falling 60 percent, slashing HUBC’s base plant load factor to 7.87 percent. Revenues dropped by 42 percent, but lower operating costs helped the company maintain flat earnings growth of 2 percent, despite higher finance costs and capital expenditures.

FY20 was impacted by the COVID-19 pandemic and government scrutiny of IPP returns. However, HUBC’s earnings more than doubled, driven by its 1,320 MW coal-fired plant and currency depreciation. Growth was tempered by higher finance costs, increased taxes, and a one-off equity transfer to the Government of Balochistan.

In FY21, HUBC’s revenue grew 13 percent, supported by a 40 percent increase in power dispatches and improved load factors across its plants. Earnings rose by 34 percent due to profits from CPHGC and lower finance costs.

FY22 saw a 15 percent drop in earnings, mainly due to lower profits from associates and higher finance costs. However, revenues increased by 78 percent, driven by higher utilization of the base and Narowal plants. Despite this, gross profits were flat, and no dividends were declared due to high fuel and commodity prices.

HUBC reported its highest-ever profit for FY23, driven by its diversification strategy and a greater share of profits from associates and joint ventures. This growth was fueled by its coal investments, particularly from the China Power Hub Generation Company (CPEC), which has been contributing since FY20, as well as the addition of the ThalNova Power Plant in February 2023 and TEL later in FY23. Consolidated revenue increased by 18 percent, primarily due to higher furnace oil prices, despite a 9 percent decline in electricity dispatches.

HUBC’s bottom line surged by 110 percent year-on-year, thanks to controlled expenses, higher other income, and a significant rise in profits from associates. However, rising finance costs, which increased by 144 percent due to higher interest rates and TEL’s finance costs, partially offset the profitability gains.

In FY24, Hub Power Company Limited delivered a robust financial performance, reporting consolidated earnings of Rs75 billion, reflecting a 22 percent year-on-year increase. This growth was driven by higher dispatches from Thar Energy Limited (TEL), the devaluation of the PKR against the USD, and improved operational efficiencies. Overall revenue growth stood at 14 percent year-on-year. While TEL and ThalNova Power Thar (TNPTL) showed strong performance with increased generation, China Power Hub Generation Company (CPHGC) saw a decline.

HUBC’s gross margins improved, benefiting from currency devaluation and contributions from new power plants. Despite a 38 percent rise in finance costs, net margins increased, supported by a 44 percent rise in profits from associates due to the commencement of operations at TEL and TNPTL, along with the currency impact.The company announced a total dividend of Rs20 per share for FY24, down from Rs30 in FY23, due to increased capital expenditure and new investments.

HUBC’s performance in FY25 reflected a year of transition, shaped primarily by the expiry of its base plant Power Purchase Agreement, softer load factors, and an ongoing strategic shift toward diversification. The company decline of 34 percent year-on-year. This reduction was largely the result of the termination of the Hub base plant agreement, which removed a major source of stable capacity revenues. Revenues also declined 36 percent year-on-year as the company absorbed the impact of both the base plant’s termination and tariff revisions at Narowal Energy Limited.

Despite these headwinds, HUBC maintained strong operational resilience. Availability across the portfolio remained solid, and the Thar-based plants—Thar Energy Limited and ThalNova Power Thar Limited—delivered approximately $290 million in annual foreign exchange savings. While profits from associates and joint ventures softened due to the appreciation of the rupee and an unusually high base year, the company saw a marked improvement in payment cycles.

HUBC in 9MFY26

In 9MFY26, HUBC’s performance reflected the continuing structural transition in its business model, as weaker earnings from its core power-generation operations were increasingly offset by higher income from associates, lower financing costs, and contributions from its diversification initiatives.

Consolidated revenue declined by 22 percent year-on-year to Rs50.6 billion, largely due to the early termination of the Hub Plant’s Power Purchase Agreement and tariff renegotiations at Narowal Energy Limited. These developments materially reduced the contribution of HUBC’s legacy generation assets and continued to weigh on the company’s topline.

Gross profit fell by 31 percent year-on-year to Rs21.6 billion, while the gross margin declined to 42.7 percent from 48.6 percent in the corresponding period. Lower spreads and reduced capacity utilisation weakened the performance of the core generation business. However, a 67 percent increase in other income to Rs6.6 billion provided partial support. Despite this increase, higher administrative expenses contributed Rs6.6 billion provided partial support. to a 14 percent decline in operating profit to Rs26 billion.

The company’s performance below the operating line remained comparatively strong. Finance costs declined by 45 percent year-on-year to Rs6.9 billion, supported by lower interest rates and continued deleveraging following repayments of CPEC-related debt. Meanwhile, HUBC’s share of profit from associates increased by 6 percent to Rs32.3 billion, remaining the primary driver of consolidated earnings. Contributions from the Thar coal projects and China Power Hub Generation Company continued to anchor profitability, while newer investments gradually increased their contribution.

This change in earnings composition highlights HUBC’s transition from a conventional power-generation company into a broader investment-led platform, with associate income and dividend receipts becoming increasingly important sources of profitability and cash generation. The completion of its major Thar-based projects has generated steady dividend inflows, supporting the company’s strong payout profile. HUBC also announced an interim cash dividend of Rs5 per share for 3QFY26, despite the continuing shift away from its legacy generation business.

Supported by higher associate income and lower finance costs, profit before tax increased by 6 percent year-on-year to Rs51.5 billion. However, taxation rose sharply by 43 percent, likely reflecting higher effective tax rates and the impact of the super tax. Consequently, profit attributable to shareholders declined by 3 percent year-on-year to Rs33 billion, translating into earnings per share of Rs25.49 for 9MFY26.

The company’s margins also reflected its evolving earnings profile. Although the gross margin weakened, the net margin increased to 74.6 percent due to the high-margin nature of associate income and the reduction in financing costs. At the same time, HUBC continued to position itself for future growth through diversification. Its partnership with BYD and investments in electric-vehicle infrastructure mark a strategic expansion into new-energy and mobility businesses, suggesting that an increasing share of future growth will come from outside traditional power generation.

The weakness was visible on both sides of the equation. Gross inflows declined by 16.4 percent to $3.57 billion from $4.27 billion, while outflows increased by 7.8 percent to $1.93 billion from $1.79 billion.

In simple terms, Pakistan attracted less fresh foreign investment while more capital was withdrawn through divestments and other FDI-related transactions. This is not the trend expected from an economy hoping to revive investment, exports, and growth.

June ended the year on an equally disappointing note. Net FDI stood at just $13.5 million, as inflows of $294.4 million were almost completely offset by outflows of $280.9 million.

Monthly investment numbers can be volatile, but the broader trend has remained weak for some time. Positive inflows are regularly offset by large withdrawals, leaving little sustained momentum.

China remained Pakistan’s largest source of FDI in FY26, but Chinese investment also lost momentum.

Net investment from China declined to $862 million from $1.20 billion in FY25. Investment from Hong Kong fell to $339.4 million from $470 million, while net flows from the UAE declined to $235.9 million from $294.3 million.

Together, China, Hong Kong and the UAE accounted for nearly 88 percent of Pakistan’s net FDI in FY26. This highlights a long-standing concern: foreign investment remains heavily concentrated in a small number of countries.

There were improvements in net investment from Switzerland, the United Kingdom, Kuwait, and Japan, but these increases were not enough to offset weaker flows from major investors and sizeable withdrawals elsewhere.

Net outflows from the United States and Norway also weighed heavily on the overall numbers. The United States recorded a net outflow of $156 million during FY26, while Norway posted a much larger net outflow of $364.7 million. In June alone, the United States recorded a net outflow of $164.5 million, more than offsetting the combined $90.6 million received from China, Hong Kong, and the UAE.

The longer-term trend is even less encouraging. Pakistan’s annual net FDI remains far below the levels seen around FY07 and FY08, when it exceeded $5 billion. Today, net FDI of around $1.6 billion is simply not enough to meaningfully expand productive capacity, exports, and employment.

Macroeconomic stability may have reduced the fear of an immediate crisis, but stability alone does not bring investment. Investors also need policy consistency, predictable taxation, reliable energy, smooth profit repatriation, contract enforcement, and a clear long-term economic direction. Pakistan continues to struggle on many of these fronts.

FY26 was therefore another weak year for foreign investment. With inflows falling, outflows rising and June ending almost flat, there are still no convincing signs of a turnaround.

RMPL produces a variety of food ingredients and industrial products using maize as a basic raw material. RMPL turned into a public limited company in 1985.

Pattern of Shareholding

As of December 31, 2025, the company has a total of 9.236 million shares outstanding which are held by 1421 shareholders. Ingredion Incorporated Chicago, USA (parent company) holds 71.04 percent shares of RMPL followed by local general public with a stake of 19.19 percent in the company.

Directors, CEO, their spouse and minor children hold 7.04 percent shares of RMPL while Insurance companies account for 1.54 percent shares. 1 percent of the company’s shares are held by Banks, DFIs and NBFIs.

The remaining shares are held by other categories of shareholders.

Financial Performance (2021-25)

RMPL’s topline posted year-on-year growth over the period under consideration. The bottomline also followed the similar trajectory except for a nosedive in 2022 and 2025. Margins attained their optimum level in 2020.

In the subsequent two years, the margins deteriorated followed by an uptick in 2023. In 2024, gross and operating margins fell while net margin posted a skimpy growth. This was followed by a decline in all the margins in 2025. The detailed performance review of the period under consideration is given below.

In 2021, RMPL’s topline grew by 18.78 percent year-on-year to clock in at Rs.42,609.63 million. The topline growth was supported by both price and volumetric increase. However, high cost of sales particularly because of elevated fuel and power cost as well as high prices of specific varieties of corn put GP margin under pressure which clocked in at 24.22 percent in 2021.

In absolute terms, gross profit inched up by 5.48 percent in 2021. Distribution expense inched up by 4.92 percent in 2021 due to elevated commission expense incurred during the year. Administrative expense mounted by 21.94 percent in 2021 due to higher payroll expense which was the result of inflationary pressure. RMPL streamlined in workforce from 1122 employees in 2020 to 1064 employees in 2021.

Other income posted 18 percent improvement over the last year due to increased mark-up income on bank deposits and staff loan as well as gain recorded on the sale of scrap in 2021. However, other income was counterbalanced by 10.54 percent higher other expense recorded in 2021 on account of profit related provisioning. Operating profit ticked up by 5.49 percent in 2021 while OP margin fell to 21 percent.

Finance cost plunged by 0.78 percent year-on-year in 2021. Monetary easing and the absence of foreign exchange loss played its role in keeping the finance cost in check.

RMPL’s net profit posted a marginal 2.68 percent year-on-year growth to clock in at Rs.6257.32 million in 2021. This translated into EPS of Rs.677.46 and NP margin of 14.70 percent in 2021 as against EPS of Rs.659.80 and NP margin of 17 percent registered in 2020.

In 2022, RMPL boasted 37.89 percent year-on-year growth in its net sales which clocked in at Rs.58,755.77 million. This was the result of better sales mix and prices which compensated for volume loss. Growth in export revenue was majorly driven by Pak Rupee devaluation which resulted in higher exchange gain for the company.

In the domestic market, while textile as well as paper and corrugation sectors continued to grapple owing to floods, weakening exports, high energy cost, recession etc, food sector provided much needed growth momentum to RMPL. 45.31 higher cost of sales incurred in 2022 didn’t let RMPL sustain its GP margin which dropped to five-year low level of 20.14 percent.

In absolute terms, gross profit picked up by 14.68 percent in 2022. Distribution expense escalated by 23.91 percent in 2022 due to higher commission expense and increased salaries of sales force.

Administrative expense surged by 34.11 percent in 2022 due to increase in IT, data communication and networking charges as well as higher payroll expense.

RMPL expanded its workforce to 1075 employees in 2022. Other income grew by 12.56 percent in 2022 due to higher profit recognized on the sale of scrap and robust foreign exchange gain. In line with the previous year, other income was offset by 10.58 percent higher other expense which encompassed provisioning done for WWF and WPPF.

Operating profit grew by 12.69 percent in 2022, however, OP margin fell down to its lowest level of 17.24 percent. Finance cost multiplied by a massive 347.76 percent in 2022 owing to higher discount rate as well as increased short-term running finances obtained during the year.

RMPL bottomline tapered off by 1.25 percent year-on-year to clock in at Rs.6179.39 million. This translated into NP margin of 10.52 percent and EPS of Rs.669.02.

In 2023, RMPL’s topline grew by 11.42 percent to clock in at Rs.65,466.70 million. While textile sector demand continued to struggle owing to higher energy cost and global demand destruction, paper & corrugation segment and food segment showed resilience during the year.

The company also explored new export markets resulting in improvement in export sales. Upward price revision to combat inflationary pressure, elevated energy cost and higher global commodity prices also supported topline growth in 2023. Cost of sales surged by 9.70 percent in 2023 due to the reasons stated above. Gross profit strengthened by 18.24 percent in 2023 with GP margin picking up to 21.37 percent.

Distribution expense posted 19.15 percent growth in 2023 on account of higher commission expense and increased salaries of sales force. Administrative expense spiraled by 37.30 percent in 2023 due to higher IT, networking and data communication charges and increased payroll expense as the company further enhanced its workforce to 1097 employees.

Other income posted a phenomenal growth of 122.97 percent in 2023 particularly on the back of hefty mark-up income, dividend income and profit on sale of scrap. Unlike previous year, in 2023, other income outnumbered other expense. Other expense grew by 19.49 percent in 2023 due to exchange loss and profit related provisioning.

RMPL posted 23.45 percent higher operating profit in 2023 with OP margin climbing up to 19.10 percent. 143.61 percent higher finance cost incurred in 2023 was the consequence of monetary tightening and increased external financing.

RMPL’s net profit progressed by 11.87 percent to clock in at Rs.6912.78 million in 2023. This translated into EPS of Rs.748.43 and NP margin of 10.56 percent in 2023.

In 2024, RMPL’s topline posted a marginal year-on-year growth of 6.81 percent to clock in at Rs.69,922.60 million. Sales growth was mainly attributable to price increase and increase in export sales on the back of tapping new markets.

Overall volumes remained subdued due to lackluster performance of textile sector which is the major customer of RMPL. Cost of sales surged by 7.42 percent due to high inflation and Pak Rupee depreciation as well as elevated energy cost. Gross profit picked up by 4.56 percent in 2024, however, GP margin slightly inched down to 20.92 percent.

Distribution and administrative expenses grew by 13.56 percent and 10.46 percent respectively during the year. The main growth propellers were enhanced payroll expense, communication expense as well as commission expense. RMPL streamlined its workforce to 1057 employees in 2024.

Other income ticked down by 5.88 percent in 2024 due to considerable decline in mark-up on bank deposits on account of the onset of monetary easing during the year. The absence of foreign exchange loss during the year pushed down other expense by 2.16 percent in 2024. Operating profit posted a marginal growth of 2.53 percent in 2024 with OP margin sinking to 18.33 percent.

Finance cost escalated by 54.14 percent in 2024 due to increased short-term and long-term borrowing and higher discount rate for most part of the year. Net profit picked up by 8.13 percent to clock in at Rs.7475.11 million in 2024. This translated into EPS of Rs.809.31 and NP margin of 10.69 percent in 2024.

In 2025, RMPL posted 4.92 percent year-on-year growth in its topline which clocked in at Rs.73,362.63 million. The growth was mainly backed by superior local sales in 2025 as the company diversified its application areas to generate sales.

Export sales remained steady for the first three quarters of 2025, however, fell in the final quarter due to Pak-Afghan border tensions. Food ingredient business faced challenges due to high price of sugar and tough competition from informal sector.

Dextrose segment also suffered from cheaper imports. Conversely, processed food, pharmaceutical, poultry & livestock sectors showed progress over the year. Cost of sales mounted by 7.70 percent in 2025 due to higher energy cost and elevated sugar and corn prices.

The company couldn’t raise its prices due to stiff competition from regional and local competitors. This resulted in 5.60 percent diminution in gross profit in 2025 with GP margin hitting its lowest level of 18.83 percent. Increased focus on cross border sales culminated into 28 percent higher distribution expense in 2025.

Administrative expense also surged by 14.26 percent in 2025 due to higher payroll expense as well as IT, network and data communication charges. Workforce was streamlined from 1057 employees in 2024 to 1029 employees in 2025. Superior gain recognized on the sale of investment and robust mark-up income in 2025 was offset by no foreign exchange gain and thinner dividend income, resulting in 2.49 percent downtick in other income in 2025.

Other expense also went down by 2.84 percent in 2025 due to lower profit related provisioning done during the year. Operating profit weakened by 10.18 percent in 2025 with OP margin falling down to 15.70 percent. Finance cost ticked up by 5 percent in 2025 due to higher working capital related financing obtained during the period. Net profit dwindled by 12.58 percent to clock in at Rs.6534.84 million in 2025. This translated into EPS of Rs.707.51 and NP margin of 8.91 percent in 2025.

Recent Performance (1QCY26)

During the first quarter of CY26, RMPL’s remained largely stable (0.06 percent downtick to be exact) to clock in at Rs.19043.84 million. Domestic sales progressed during the period backed by food ingredient, processed foods, pharmaceutical, nutraceutical and dextrose segments. Conversely, export sales ticked down due to geopolitical tensions which dampened the demand across segments.

Discontinuation of trade with Afghanistan due to border tensions and price war among regional peers also affected export sales in 1QCY26. Cost discipline and operational efficiency resulted in 6.83 percent improvement in RMPL’s gross profit in 1QCY26 with GP margin clocking in at 21.86 percent versus GP margin of 20.45 percent recorded in 1QCY25.

Operating expense ticked up by 5.55 percent in 1QCY26 due to inflationary pressure, product diversification and improved geographical mix. Monetary easing and a decline in short-term investment appear to be the cause of 40.68 percent diminution in other income in 1QCY26. Other income was almost offset by 2.40 percent uptick recorded in other expense during the period which is likely due to increased provisioning done for WWF and WPPF.

RMPL recorded 1 percent uptick in its operating profit in 1QCY26 with OP margin staying intact at 18 percent. Finance cost plunged by 40 percent in 1QCY26 due to monetary easing and settlement of a considerable portion of outstanding liabilities.

RMPL registered 3.98 percent growth in its net profit which clocked in at Rs.2032.881 million. This translated into EPS of Rs.220.09 and NP margin of 10.67 percent in 1QCY26 versus EPS of Rs.211.67 and NP margin of 10.26 percent recorded in 1QCY25.

Future Outlook

Improvement in local macroeconomic indicator provided some respite and contributed to improved local demand; however, rising geopolitical tensions, global recession, increased competition and heightened energy tariff continue to suppress the company’s financial performance.

The company aims to combat these challenges by controlling non-productive cost, achieving product mix optimization and enhancing its export sales.

Recently, a public announcement has been made by Nishat Hotels and Properties Limited, D. G. Khan Cement Co. Limited, Nishat Mills Limited, Nishat Power Limited, Nishat Chunian Power Limited, Lalpir Power Limited, Pakgen Power Limited, Mrs. Naz Mansha, Mr. Raza Mansha, Mr. Umer Mansha and Mr. Hassan Mansha for the acquisition of 298,759 ordinary shares and management control of RMPL. This will likely instill a new life to the financial performance of RMPL by improving its export channels, facilitating better procurement, initiate R&D through capital backing and making more aggressive expansions across market segments.

e reason for slipping into deficit in June was relatively low remittances, which were down 18 percent MoM.

However, remittances recorded decent growth on a high base, rising by 9 percent YoY, which more than offset the impact of the worsening goods trade deficit.

Going forward, keeping the current account deficit in check will be a challenge, as the Iran war is nowhere close to over. This poses risks to remittances coming from GCC countries, which accounted for 55 percent of total remittances in FY26, as well as the possibility of higher oil imports, which in the last quarter were at their highest level since 4QFY22.

In FY26, imports, based on PBS data, stood at USD69.7 billion, the highest annual figure barring FY22, a year marked by a commodity supercycle boom.

Despite such high imports and oil prices averaging USD79 per barrel, economic growth is still shy of 4 percent. That must be a point of concern for an economy where exports are stagnating.

Imports excluding petroleum stood at USD52.9 billion, which is 7 percent lower than the FY22 peak. Food imports are at an all-time high, with almost all items recording growth despite there being no major one-time import. That is a point of concern, especially as food exports are falling, down 30 percent YoY to USD5.0 billion.

The food trade deficit has reached an all-time high of USD4.1 billion, surpassing the FY22 deficit of USD3.6 billion.

The transport sector remained in the limelight, with the import bill reaching USD4.1 billion, representing 66 percent YoY growth. CKD car imports increased by 92 percent to USD2.1 billion and were even higher than in FY22, although a greater number of cars were sold that year. This is despite the SBP keeping the financing limit low and taxes on cars exorbitantly high.

The increase in petroleum imports was restricted to 5 percent, taking the total to USD16.8 billion, which is 28 percent below the FY22 peak. Although oil prices, especially those of petroleum products, increased significantly in the last quarter, the lower availability of RLNG kept growth in check. Nonetheless, petroleum imports jumped by 72 percent QoQ and 40 percent YoY to reach USD5.6 billion in 4QFY26, the highest level since 4QFY22. If oil prices remain high, FY27 will be a challenging year.

There is nothing to be jubilant about in the performance of goods exports, which declined by 6 percent to USD30.1 billion in FY26. The worst-performing category, as mentioned above, was food exports, where border closures and poor agricultural policies are yielding weak results. Textile exports stagnated at USD17.9 billion, while other manufacturing exports declined by 4 percent.

The goods trade deficit worsened by 25 percent to USD33.6 billion. The upbeat performance of services exports partially compensated for this deterioration. ICT and other business services exports combined increased by 22 percent to USD6.8 billion. This limited the increase in the goods and services trade deficit to 20 percent, taking it to USD35.5 billion.

The remaining goods trade deficit was compensated for by the continued strong performance of remittances, which increased by 9 percent on a high base to USD41.6 billion. However, as mentioned above, the risks to the continuation of this momentum are growing.

This will keep the current account recovery fragile. Any slippage in remittances and/or an uptick in oil prices may force the SBP to return to austerity measures by tightening non-essential imports.

However, the focus on enhancing merchandise exports, which are on a gradual decline, is missing. They are now heavily taxed, while all the concessions have been withdrawn. Moreover, the currency is not supporting them. The SBP’s published REER stands at 106.5, its highest level since 2018, and keeping the currency overvalued is detrimental to export growth.

That puts pressure on the SBP to continue buying from the interbank marketand to build reserves, which currently stand at USD17.2 billion. Given the authorities’ fixation with the currency, the chances of any rate cut during this calendar year are close to none.

BGL’s has three manufacturing facilities, one of which is located in Hub Balochistan while the other two are located in Sheikhupura, Lahore.

Pattern of Shareholding

As of June 30, 2025, BGL has a total of 638.512 million shares outstanding which are held by 4074 shareholders. MMM Holding (Private) Limited, the parent company of BGL has 93.59 percent stake in the company followed by local general public holding 6.05 percent shares of BGL.

The remaining ownership is distributed among other categories of shareholders.

Financial Performance (2021-25)

Over the period under consideration, BGL’s topline slid in 2021, 2023 and 2024. The company recorded positive bottomline only in 2021. Its margins also stood in the negative territory in all the years under consideration except for 2021. The detailed performance review of the period under consideration is given below.

2021 is the only year after 2016 where BGL posted net profit. The adverse effects of COVID-19 continued to cripple the operations of the company which is evident from the topline slide of 16.19 percent year-on-year recorded in 2021. BGL’s net sales stood at Rs.1252.22 million in 2021.

Both local and export sales witnessed a dip during the year owing to restricted movement of people and goods on account of global pandemic. Low sales volume was also the result of the closure of pharmaceutical operations during the year which couldn’t be offset by the expansion of tableware glass project.

However, lesser sales also meant controlled cost of sales. This resulted in gross profit of Rs.117.50 million recorded in 2021 as against gross loss of Rs.44.45 million posted in the previous year. GP margin stood at 9.38 percent in 2021.

Administrative and selling expense as well as other expense also behaved favorably during the year owing to lesser freight, handling and forwarding charges and absence of provision for GIDC balance respectively.

Other income increased by 3879.93 percent in 2021 owing to unwinding of discount on GIDC payable and reversal of provision for default surcharge on taxation. This culminated into operating profit of Rs.121.77 million in 2021 with OP margin of 9.72 percent. Finance cost also slid by 23.51 percent during the year on the back of low discount rate as well as lower outstanding borrowings during the year.

The company also received share of profit from its investment in Paidar Hong Glass (Private) limited (PHGPL). As a consequence, BGL posted net profit of Rs.25.46 million in 2021 with NP margin of 2 percent. EPS stood at Rs. 0.10 in 2021. This was against the net loss of Rs.464.21 million and loss per share of Rs.1.77 recorded in 2020.

In 2022, BGL posted a marginal growth of 7.49 percent in its topline which clocked in at Rs. 1346.05 million. This was because the curtailment of gas supply during the year didn’t allow BGL to attain its targeted production levels during the year. The company also didn’t record any export sales during the year which also affected its topline growth.

High inflationary pressure particularly incremental gas prices as well as depreciation of Pak Rupee drove up the cost of sales by 33.66 percent and resulted in gross loss Rs.170.58 million in 2022. Operating expense also grew by 21.40 percent in 2022 on the back of inflationary pressure which drove up the payroll expense despite massive reduction in the number of employees from 268 in 2021 to 120 in 2022.

Higher freight and forwarding as well as travelling & conveyance expense due to escalated prices of POL products also pushed the operating expense up during the year. Other expense gave another blow to the company as it grew by 122.93 percent in 2022 on the back of higher provisioning for doubtful trade balances.

Other income provided the much needed support as it grew by 41.37 percent year-on-year in 2022 on the back of markup written back on settlement with bank and other associates.

BGL failed to record operating profit during 2022. Operating loss stood at Rs.158.56 million in 2022. Finance cost grew by 21 percent in 2022 on the back of high discount rate during the year coupled with higher short-term borrowings obtained during the year.

The share of profit from the associate company, PHGPL also dropped by 79.66 during the year. All the downbeat factors culminated into net loss of Rs.269.44 million with loss per share of Rs.1.03 in 2022.

In 2023, BGL’e net sales drastically dropped to the tune of 86.18 percent year-on-year to clock in at Rs.186.01 million. This was on account of the closure of the company’s table glassware division since May 2022 to overcome the operational and financial vulnerabilities faced by the company. As of June 30, 2023,

BGL had an accumulated loss of around Rs.6118 million due to net losses registered by the company for many years. Cost of sales slipped by 74.96 percent year-on-year in 2023.

Gross loss hiked by 13.55 percent year-on-year to clock in at Rs.193.69 million in 2023. Administrative and selling expense slumped by 66.71 percent year-on-year in 2023 due to significantly lower payroll expense incurred during the year as the company downsized its workforce from 120 in 2022 to just 6 in 2023.

Lower travelling & conveyance and freight charges also contributed in driving down the operating expense in 2023.

Considerable reduction in provisioning for doubtful trade debts trimmed down other expense by 37.26 percent in 2023. Other income also gave some breather as liabilities no longer payable were written back during the year resulting in 128.68 percent rise in other income in 2023.

Thanks to other income, BGL was able to post operating profit of Rs.5.35 million in 2023 with OP margin of 2.87 percent. However, operating profit couldn’t trickle down to produce a positive bottomline in the presence of 39.79 percent hike in finance cost on the back of high discount rate.

BGL posted net loss of Rs.135.06 million in 2023, down 49.88 percent year-on-year. Loss per share also toppled to Rs.0.52 in 2023.

In 2024, BGL’s net sales eroded by 13.26 percent year-on-year to clock in at Rs.161.35 million. This was the result of a sustained halt of glass production owing to the management’s decision to cope up with exorbitant production costs by undertaking measures to improve operational efficiency.

Inconsistent gas supply, elevated energy cost and hike in the prices of raw materials made it difficult for the company to continue its operations. As of June 30, 2024, BGL’s accumulated loss stood at Rs.6615.27 million versus accumulated loss of Rs.6117.596 million recorded at the end of last financial year.

Majority of the company’s long-term and short-term loans were obtained for its holding company, associated companies, directors and ex-directors. The company had written back its accrued mark-up and liabilities in the previous year as a result of settlement with banks and waiver received from associated parties.

Despite topline slide, BGL’s cost of sales escalated by 18 percent in 2024. This was the result of higher utility charges and inventory purchased during the year. In 2024, BGL signed a supply agreement with Tariq Glass Industries Limited (TGL), an associated company, whereby the latter will facilitate the procurement of essential raw materials, machinery, stores & spares as well as refractory components under the arm’s length pricing principle which was in accordance with Section 208 of the Companies Act, 2017. This step was taken for the rehabilitation and optimization of BGL’s operating lines.

TGL and Gharibwal Cement Limited (GCL), the associated companies, also provided corporate guarantees of Rs.3371.536 million on behalf of BGL in favor of banking companies for obtaining financial facilities. During the year, BGL recorded gross loss of Rs.286.68 million, up 48 percent year-on-year.

Operating expense dropped by 4.36 percent in 2024 due to lower payroll expense as well travelling & conveyance charges incurred during the year. To kick start its halted operations, BGL made human resource induction. Its workforce stood at 162 employees in 2024 versus 6 employees in 2023. Other expense grew by 9.33 percent in 2024 due to allowance booked for doubtful balances.

Conversely, the company made a petite other income of Rs.0.03 million in 2024, down 99.9 percent year-on-year as unlike last year, there were no liabilities written back during the year. BGL posted operating loss of Rs.321.57 million in 2024.

Finance cost surged by 29.23 percent in 2024 due to mark-up incurred on additional loans acquired from related parties as well as bank & guarantee commission charges incurred during the year. The company incurred net loss of Rs.508.72 million in 2024, up 276.68 percent year-on-year. Loss per share stood at Rs.1.94 in 2024.

In 2025, BGL’s topline posted a staggering year-on-year growth of 344.91 percent to clock in at Rs.717.83 million. Out of the three glass production plants owned by the company, two have already completed their useful campaign life. The third plant became operational during the year, however, suffered from irregular shutdowns due to technical issues.

Hence, the company primarily relied on its inventory of tableware and pharmaceutical packaging glass to meet the demand during the year instead of fresh production. Cost of sales surged by 163.74 percent in 2025 due to higher fixed cost per unit on account of idle capacity. This translated into gross loss of Rs.463.79 million in 2025, up 61.78 percent year-on-year.

Administrative & selling expense mounted by 160.17 percent in 2025 due to higher payroll expense, travelling & conveyance charges as well as freight charges incurred during the year. Other expense dipped by 97.70 percent in 2025 as the company booked lesser allowance for doubtful debt. BGL recorded other income of Rs.68.64 million in 2025, as against other income of Rs.0.03 million recorded in 2024. This was the result of gain recorded on the disposal of fixed assets and stock & stores. Operating loss surged by 41.92 percent to clock in at Rs.456.37 million in 2025.

Finance cost escalated by 34.24 percent in 2025 despite monetary easing. This was because of increased short-term and long-term borrowings obtained from holding company (M/s MMM Holding Private Limited) and associated company (Gharibwal Cement Limited) during the year.

In 2025, the company undertook a major financial overhaul and allotted 376,912,057 ordinary shares to M/s MMM Holding (Private) Limited. This was against the outstanding loan payable by BGL. M/s MMM Holding (Private) Limited now own 93.5858 percent of the total paid-up capital of BGL. BGL’s net loss multiplied by 40.25 percent to clock in at Rs.713.46 million in 2025. Loss per share stood at Rs.1.85 in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, BGL’s net sales drastically fell by 96.95 percent to clock in at Rs.21.41 million. This was because no production operations were carried out during the period and the company cleared its existing inventory.

Discontinuation of furnace operations was due to inconsistent gas supply, elevated energy tariff and higher cost of raw materials which rendered fresh production economically infeasible in the face of thinner demand and price competitiveness. Cost of sales plunged by 78.47 percent in 9MFY26 resulting in gross loss of Rs.209.25 million, down 43.47 percent year-on-year.

Due to widespread downsizing, administrative expense plummeted by 76 percent in 9MFY26. Other income also deteriorated by 67 percent in 9MFY26 as no gain was recognized from the sale of operating fixed assets. Gain from the sale of stock and stores also thinned in 9MFY26.

BGL recorded operating loss of Rs.206.53 million, down 45.26 percent year-on-year. Finance cost tapered off by 23 percent in 9MFY26 due to monetary easing and successful restructuring of loans obtained from Gharibwal Cement Limited, Tariq Glass Industries Limited and MMM Holding (Private) Limited.

The equity restructuring completed in the previous year also contributed in streamlining BGL’s finance cost in 9MFY26. Net loss shrank by 38.38 percent to clock in at Rs.359.328 million in 9MFY26. This translated into loss per share of Rs.0.56 in 9MFY26 versus loss per share of Rs.1.93 recorded in 9MFY25.

Future Outlook

With the support of its sponsors and associated companies, BGL is working out strategies to resume its commercial operations. However, the plan is contingent upon stable gas supply and availability of energy at competitive tariffs.

The company also plans to achieve energy efficiency, cost optimization and product diversification to buttress its financial performance. Meanwhile, the company is also constantly managing its liquidity by streamlining its capital structure and reducing its reliance on external borrowings.

The more meaningful challenge now is the base effect. With FY26 having delivered exceptionally strong numbers, sustaining similar growth rates into FY27 will become increasingly difficult.

Food has emerged as the second-largest pillar of recovery, though the story is almost entirely one of sugar. Production has climbed to a record 7.7 million tons, up 32 percent from the previous year, making it the single biggest driver within the food basket. Elsewhere, edible oil, ghee and tea have remained largely flat, underscoring how concentrated the sector’s gains have been.

Wearing apparel, tracked through ready-made garment export quantities, completes the top three contributors. After posting double-digit growth through much of the fiscal year, momentum has eased steadily. Cumulative growth has moderated to around 7 percent, and June export data suggests FY26 is likely to close around 5.5 percent. The sector will remain a meaningful contributor, but its outsized role in driving LSM is gradually diminishing.

Petroleum has quietly re-emerged as another important source of support. Higher domestic demand, coupled with improved local crude availability, has helped refine output recover sharply after a subdued FY25.

The drag from lagging sectors, meanwhile, remains surprisingly limited. Pharmaceuticals and chemicals continue to underperform among the larger industries, while textiles, despite carrying the highest weight in the LSM basket, remain marginally in negative territory.

Importantly, none of the contracting sectors has recorded deep declines, allowing the overall manufacturing recovery to retain its broad-based character.

Looking ahead, the macro backdrop is arguably the most supportive it has been in years. Lower interest rates, coupled with substantially lower industrial electricity tariffs, should continue to improve manufacturing competitiveness and encourage capacity expansion.

The easing in financing and energy costs is likely to provide the next leg of support to LSM, particularly for sectors that have yet to participate meaningfully in the recovery.

Even so, expectations should remain grounded. FY22 continues to represent an exceptionally high benchmark, and the current recovery is better viewed as a steady reclamation of lost ground rather than the beginning of a new industrial boom.

The principal activity of the company is the manufacturing and sale of copper rods, wires, cables and conductors, aluminum extrusion profiles and PVC compounds.

Pattern of Shareholding

As of June 30, 2025, PCAL has a total of 54.457 million shares outstanding which are held by 2421 shareholders.

Directors, CEO, their spouse and minor children have the majority stake of 26.96 percent in the company followed by local general public holding 25.86 percent of its shares.

Associated companies, undertakings and related parties which comprise of International Industries Limited and Shirazi Investments (Private) limited hold 17.12 percent and 4.22 percent shares of PCAL respectively. Banks, DFIs, NBFIs, Insurance companies, Takaful, Modarabas & Pension funds collectively account for 2.28 percent of the company’s shares. The remaining shares are held by other categories of shareholders.

Financial Performance (2021-25)

PCAL’s topline followed an upward trajectory over the period under consideration. PCAL’s bottomline mustered staggering growth in 2021 and 2022 with the highest ever net profit recorded in 2022. In the subsequent years, PCAL’s net profit considerably shrank.

The company posted net loss in 2025. PCAL’s margins which were dwindling until 2020, significantly recovered in 2021. In the next two years, while gross and operating margins kept rising to max out in 2023, net margin followed a descending route. In 2024 and 2025, all the margins registered a plunge. The detailed performance review of the period under consideration is given below.

With a magnificent 44.67 percent year-on-year rise in its topline, PCAL seems to have come out of its misfortune pitch in 2021. Net sales were recorded at Rs. 13,145.05 million in 2021. This was on account of a rebound in demand due to multiple policy initiatives undertaken by the government including construction package.

The company also invested in a new plant during the year using SBP Temporary Economic Refinance Facility (TERF). Sharp spike in international copper prices during the year resulted in price rationalization of PCAL’s products which also buttressed the net sales in 2021.

Besides Pakistan, the sales to African region also stayed upbeat during 2021. Cost of sales grew by 41.24 percent year-on-year in 2021. Robust sales volume and prices resulted in 77.44 percent year-on-year growth in gross profit with GP margin jumping up to 11.61 percent in 2021 from 9.47 percent in 2020.

Higher freight charges and payroll expense drove the distribution expense up by 19.46 percent year-on-year in 2021. Administrative expense also grew by 22.34 percent year-on-year in 2021. Other expense and other income posted an extraordinarily high growth of 1142.26 percent and 382.54 percent respectively in 2021. Higher other expense was due to increased provisioning done for WWF and WPPF booked in 2021. Other income grew primarily on the back of insurance claim received against business interruption.

Operating profit posted a staggering year-on-year growth of 322.83 percent in 2021 with OP margin of 7 percent versus 2.40 percent in 2020. Finance cost shrank by 32 percent in 2021 despite increased borrowings during the year. This was on account of lower policy rate.

PCAL posted net profit of Rs.553.65 million in 2021 as against the loss of Rs.91.876 million posted in 2020. This translated into an EPS of Rs.15.56 and an NP margin of 4.21 percent in 2021 – the highest among all the years under consideration.

The luck streak continued in 2022 as PCAL posted a splendid 61 percent growth in its net sales which clocked in at Rs. 21,167.66 million. This came on the back of a rise in both volumes and prices of the company’s products. This was despite the fact that the country was passing through immense political turmoil during 2022 which had pushed it into serious macroeconomic vulnerabilities.

Cost of sales grew by 58.51 percent year-on-year in 2022 due to commodity super cycle on account of Russia-Ukraine crisis as well as Pak Rupee depreciation.

Energy price hike also added insult to injury. PCAL was able to attain 80.21 percent year-on-year growth in gross profit with GP margin jumping up to 13 percent in 2022.

Distribution expense grew by 46.77 percent year-on-year in 2022 on the back of higher advertising and freight charges. Administrative expense also escalated by 21 percent year-on-year in 2022 which was the result of an uptick in the number of employees from 465 in 2021 to 503 in 2022 and also because of the inflationary pressure which drove the salaries up.

During the year, PCAL booked an impairment allowance worth Rs.71.58 on investment in International Industries Limited (IIL), an associate company of PCAL. PCAL’s net sales were strong enough to absorb the elevated operating expenses and trickle down into 76.19 percent bigger operating profit in 2022 with OP margin of 7.68 percent.

Finance cost magnified by 63 percent year-on-year in 2022 due to higher discount rate and also because of increased borrowings particularly running finance facilities obtained during the year.

In 2022, PCAL’s net profit grew by 49.50 percent year-on-year to clock in at Rs.827.73 million with NP margin of 3.91 percent in 2022. EPS stood at Rs.16.72 in 2022.

In 2023, PCAL registered a paltry 2.29 percent growth in its net sales which clocked in at Rs.21,652.95 million. This was due to high prices of copper while sales volume remained depressed on account of slow construction and industrial activity in the country.

During the year, the company’s sales also suffered due to import restrictions, inflationary pressure, higher discount rate, Pak Rupee depreciation and supply chain disruptions. The devastating floods that occurred during the year further worsened the economic conditions. With lower off-take, cost of sales grew by only 0.28 percent, resulting in 15.74 percent year-on-year growth in gross profit in 2023.

GP margin considerably grew to 14.70 percent – the highest since 2018. Despite lower sales volume and dejected overall business performance, distribution expense grew by 5.78 percent due to elevated carriage and forwarding expenses. Administrative expense surged by 9.11 percent year-on-year in 2023 on account of unprecedented level of inflation.

Operating profit grew by 27.90 percent year-on-year in 2023 with OP margin marching up to 9.61 percent. Finance cost multiplied by 204.10 percent in 2023 on the back of high discount rate and increased long-term loans obtained during the year to finance the company’s capital expenditure plans.

PCAL’s net profit couldn’t sustain the massive finance cost and shed its value by 12.57 percent year-on-year in 2023 to clock in at Rs.723.65 million with NP margin of 3.34 percent and EPS of Rs.14.62.

PCAL registered year-on-year growth of 20.85 percent in its topline which clocked in at Rs.26,167.04 million in 2024. This was the result of improved sales volume as well as upward price revisions due to elevated copper prices.

During the year, copper prices touched its record high price of USD 11,105 per ton. In the presence of thin demand, the company couldn’t completely pass on the impact of cost hike to its consumers. While gross profit ticked up by 5.65 percent in 2024, GP margin slipped to 12.85 percent. Distribution expense mounted by 23.55 percent in 2024 due to higher advertising and promotion budget and an increase in carriage and forwarding charges incurred during the year.

Administrative expense ticked up by just 2.32 percent in 2024 on account of inflation. The company also expanded its workforce from 549 employees in 2023 to 574 employees in 2024. For the past three years, PCAL had been booking reversals of allowance on trade receivables.

However, it was replaced by booking of impairment allowance worth Rs.52.03 million during the year. Operating profit dwindled by 1.63 percent in 2024 with OP margin falling down to 7.82 percent. Finance cost escalated by 82 percent in 2024 due to higher discount rate and long-term debt obtained during the year to finance its manufacturing facility in Nooriabad. PCAL’s debt-to-equity ratio climbed up from 37 percent in 2023 to 44 percent in 2024.

The company recorded 71.14 percent year-on-year decline in its net profit in 2024 which clocked in at Rs.208.858 million with EPS of Rs.3.84 and NP margin of 0.80 percent.

In 2025, PCAL’s topline grew by 11.16 percent to clock in at Rs.29,088.37 million. This was mainly on account of upward price revision of the company’s products in line with the escalation in cost of sales.

The year was marked by an improvement in macroeconomic indicators - decline in inflation and discount rate, stability of Pak Rupee, rising foreign exchange reserves and current account surplus, however, subdued industrial and construction activity due to lackluster development spending, shattered investor confidence and elevated construction, cost resulted in low demand of PCAL’s products in 2025.

Cost of sales surged by 14.29 percent in 2025 due to elevated prices of copper and aluminum as the demand of these metals in the EV and renewable energy markets was higher than the supply. This resulted in 10 percent dip in gross profit in 2025 with GP margin falling down to 10.40 percent.

Distribution expense plunged by 2.34 percent in 2025 mainly on account of considerably lower advertising & promotion budget allocated for the year. Administrative expense ticked up by 1.42 percent in 2025 due to higher repair & maintenance charges as well as increased communication expense.

Payroll expense nosedived in 2025 as the company streamlined its workforce from 574 employees in 2024 to 536 employees in 2025. Other expense descended by 55.76 percent in 2025 as no provisioning was done for WWF and WPPF.

Other income strengthened by 147.91 percent in 2025 due to higher sale of scrap, increased gain on the disposal of fixed assets, greater income from bank deposits and TDRs as well as amortization of government grant. PCAL’s operating profit dipped by 1.28 percent in 2025 with OP margin falling down to 6.94 percent.

While discount rate considerably dropped during the year, PCAL’s finance cost mounted by 40 percent in 2025 due increased external borrowings to meet working capital requirements as well as to finance its manufacturing facility at Nooriabad. PCAL posted net loss of Rs.280.601 million in 2025 with loss per share of Rs.5.15.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, PCAL posted year-on-year uptick of 5.51 percent in its net sales which clocked in at Rs.23,471.25 million. The growth came on the back of local sales while export sales ticked down during the period. Improvement in local sales was due to the revival of construction activity in the country on the back of recovery witnessed in the local macroeconomic indicators.

Export sales weakened during the period due to lesser sales recognized from American and Middle Eastern region and no sales made to Asian region (besides local sales). Stronger topline could only muster a marginal 2.15 percent uptick in gross profit in 9MFY26 due to elevated prices of copper and aluminum and higher energy cost.

GP margin dipped from 10.50 percent in 9MFY25 to 10.16 percent in 9MFY26. Selling & distribution expense inched up by 8.51 percent in 9MFY26 on the back of higher advertising & promotion budget which was partially offset by lesser carriage & forwarding expense incurred during the period. Administrative expense surged by 13.12 percent in 9MFY26 due to higher payroll expense.

Other expense dropped by 76.59 percent in 9MFY26 likely due to lesser liquidated damages for late deliveries. Other expense was offset by other income of Rs. 235.50 million recognized during the period, up 11.75 percent year-on-year. This was due to robust gain recognized on the sale of fixed assets in 9MFY26.

PCAL recorded 2.86 percent dip in its operating profit in 9MFY26 with OP margin clocking in at 6 percent versus 6.58 percent recorded in 9MFY25. Finance cost shrank by 9.63 percent in 9MFY26 due to monetary easing.

Conversely, short-term borrowings escalated during the period. What massively strengthened PCAL’s bottomline was the robust share of profit from associate (Chinoy Engineering & Construction Private Limited) worth Rs.480.64 million recognized during the period, up 980.12 percent year-on-year. This enabled the company to record net profit of Rs.206.23 million in 9MFY26, versus net loss of Rs.260.986 million recorded in 9MFY25. EPS clocked in at Rs.3.79 in 9MFY26 versus loss per share of Rs.4.79 recorded in 9MFY25.

Future Outlook

Investment in the country’s grid infrastructure and renewable energy to mitigate the soaring energy cost as well as increased development spending to make up for the infrastructure losses due to floods will create ample demand for the company’s products.

Besides, the policy measures taken by the federal government and Sind government to stimulate growth in the construction and housing sectors will also result in improved demand of PCAL’s products. The company has recently completed the expansion of its Nooriabad manufacturing facility. This will also boost the company’s operational efficiency and result in improved financial performance.

On the flipside, the company’s financial performance hinges on the prices of copper, aluminum and petroleum which are projected to spike in the wake of the ongoing geopolitical tensions.

The onset of monetary tightening may also mar the company’s financial performance given its highly leveraged capital structure.

Each prescription contains some truth, but the error lies in assuming that correcting one component can compensate for the dysfunction of the whole.

Recent travel by the author across rural Sindh, South Punjab, and Gilgit-Baltistan offers a useful counterpoint to the conventional description of Pakistan as a technologically backward and cash-dependent economy. From small settlements around Kunri, Mirpurkhas and Tando Allah Yar to distant towns and villages around Skardu and Gulmit, cash was rarely necessary.

Roadside shops, small restaurants, informal service providers and businesses with little visible documentary footprint routinely accepted bank transfers or mobile payments. Digital acceptance was not confined to sophisticated urban retailers. It had reached economic actors operating at the outer edges of both geography and formal regulation.

The national data point in the same direction. According to the State Bank of Pakistan, the number of QR-enabled merchants more than doubled during FY2024-25, rising from approximately 516,000 to 1.09 million. This is an important achievement, but it demonstrates considerably less than policymakers often assume.

A digital payment does not give a business a legal identity. It does not create accounts, establish taxable income, register employees, generate invoices, secure licences or produce enforceable contracts. Nor does it necessarily distinguish commercial turnover from an ordinary transfer between two individuals.

The same payment infrastructure can facilitate transactions for a documented company, an unregistered roadside business and an activity operating entirely outside the formal regulatory perimeter. Digital infrastructure can reduce transaction friction, but formalisation requires institutions.

Pakistan may therefore have digitised large parts of informal commerce without integrating those businesses into a broader productive system.

A transaction may become visible somewhere in the financial network while the enterprise itself remains commercially illegible. Its payment history does not automatically become a credit profile. Its turnover does not necessarily support supplier finance, insurance, government procurement or working capital.

Technology has performed the narrow function assigned to it, but the institutions surrounding the transaction have not converted it into enterprise capability.

Recent travel through Istanbul during peak tourist season presented the reverse paradox. Across restaurants, traditional markets, confectioners and independent retailers in Sirkeci and the surrounding commercial districts, cash was frequently preferred.

Discounts of around 10 per cent for payment in Turkish lira rather than by card were repeatedly offered.

The preference may reflect card-acquiring costs, commercial habit, the greater traceability of electronic transactions or some combination of the three. None of this permits conclusions about the tax treatment of any individual business. The relevant observation is narrower: a visible preference for cash has not prevented Istanbul from sustaining an extraordinarily dense tourism and small-business economy.

Türkiye received roughly 64 million visitors and earned approximately $65 billion in tourism revenue in 2025. Tourists continue to arrive despite cash preferences, high prices, summer congestion, uneven service and other imperfections that would ordinarily dominate Pakistan’s discussion of tourism reform.

This should invite greater scepticism towards the proposition that Pakistan can unlock tourism primarily by improving hotels or payment acceptance.

Hotels matter, but they operate inside a destination system. That system includes aviation connectivity, visas, public transport, security, walkability, historical sites, public spaces, entertainment, food, retail density, urban management and international marketing. It also includes confidence that a visitor can move between these elements without repeatedly encountering administrative or logistical failure.

Istanbul’s individual businesses are not required to create Istanbul because the city delivers customers to them. Pakistan, by contrast, frequently asks an isolated hotel, restaurant or tour operator to compensate for the absence of the destination system around it.

A good property can provide excellent rooms, food and service, but it cannot independently repair roads, operate airports, maintain public spaces, create commercial density, manage waste, enforce safety standards or establish confidence in the wider journey.

China offers an even sharper example. For an overseas visitor, its payment environment can be difficult to navigate. Everyday commerce is organised around domestic applications such as Alipay and Weixin Pay.

International cards, foreign digital wallets, familiar applications and translation interfaces may work inconsistently. Recent reforms have improved foreign access, but the system still often requires the outsider to adapt to domestic commercial architecture.

Yet China did not become a manufacturing and SME powerhouse by designing every domestic interface around the convenience of the occasional foreign visitor. It built an environment that works, at enormous scale, for firms operating within its productive economy.

Yiwu’s merchants benefit from wholesale-market density, logistics, warehousing, supplier networks, transport infrastructure, digital platforms, export intermediaries and local administrative capacity. A foreign visitor may struggle with a payment or translation interface, but the enterprise itself does not struggle to locate an entire commercial ecosystem.

China requires the outsider to adapt to a coherent system; Pakistan requires the entrepreneur to adapt continuously to an incoherent one.

The comparison is not about national character, hospitality or work ethic. Impressions of service, language ability and salesmanship are necessarily subjective.

Recent travel observations suggest that Pakistani retailers can often be more willing to bargain, improvise, communicate in English or make unusual arrangements to complete a sale than counterparts in some larger commercial centres abroad. But warmth, effort and salesmanship do not explain national economic performance.

Pakistani entrepreneurs frequently work harder at the level of the individual transaction because the surrounding system has transferred the burden of coordination onto them.

The owner must locate customers, arrange delivery, manage unreliable electricity, maintain informal credit relationships, navigate taxes, deal with officials, monitor security and protect inventory from infrastructure failure. Much of this effort is defensive. It prevents the enterprise from collapsing, but does not improve its product, productivity or scale.

In a better-functioning environment, a business can appear less industrious because more of the work has already been performed collectively.

Public transport brings workers and customers. Roads move inventory. Waste is removed. Electricity is sufficiently reliable. Commercial districts remain accessible and secure. Women can participate as workers, entrepreneurs and consumers. Courts and administrative systems provide at least a credible expectation that contracts and property rights will survive a dispute.

Where these foundations exist, an individual merchant can decline to bargain, provide indifferent service or temporarily close the shop and still remain commercially viable.

The system supplies enough demand, connectivity and predictability to tolerate ordinary mediocrity. Where they do not exist, extraordinary effort may still produce only subsistence.

Governance must therefore be understood as a whole-of-systems experience. It is not synonymous with digitisation, access to credit, tax registration or regulatory reform. It includes public transport, drainage, waste management, roads, policing, electricity, telecommunications, female mobility, local government, courts, political stability and the consistent application of rules.

None of these systems must function perfectly. A recent power interruption in the middle of Istanbul’s Spice Bazaar did not erase the commercial ecosystem surrounding it.

Customers remained present, transport continued to operate, suppliers remained connected and the destination retained its economic value.

In Pakistan, failures tend to compound. Rain damages the road. Inventory is delayed. Electricity fails. Perishable goods deteriorate. Customers cannot travel. Sales collapse. A loan instalment is missed. The financial institution then records another example of an SME with weak credit quality, and the policy response is often to design another financing facility.

The deepest cost of this environment is not fully recorded in an electricity bill, tax return or bank statement. It is the claim that institutional uncertainty places on the entrepreneur’s attention.

A small-business owner must consider whether waste will be removed, whether a road will remain passable, whether mobile services will be suspended, whether a procession will close the market, whether a regulatory interpretation will change, or whether an unrelated controversy will abruptly interrupt commercial activity.

In Pakistan, an event originating far outside the enterprise can escalate into market closures, disrupted transport, telecommunications restrictions and a collapse in footfall. The individual business has no control over the underlying controversy but must nevertheless carry its commercial consequences.

Attention devoted to institutional survival cannot be devoted to the enterprise. Working capital held against disruption cannot finance inventory. Time spent dealing with officials cannot be spent developing customers. Management capacity consumed by power, security and logistics cannot improve quality or support entry into a new export market.

Bad governance taxes enterprise in money, time and cognitive bandwidth. The burden is especially severe for small firms because large corporations can purchase private substitutes. They can employ lawyers, generators, security teams, logistics departments, tax advisers and government-relations staff.

A small firm pays for the same institutional failures through the owner’s time, working capital and foregone growth.

This is why isolated SME interventions repeatedly disappoint. Credit cannot compensate for broken logistics.

Training cannot create demand. Digitisation cannot produce legal identity. Formalisation will not become attractive when visibility merely exposes a business to additional regulation and predation. A hotel cannot independently construct a tourism destination.

The appropriate policy question is therefore not how to make Pakistani entrepreneurs work harder, borrow more, register sooner or adopt another application. They already expend an extraordinary amount of effort. The relevant question is how much of that effort is being wasted on problems that should have been solved collectively.

Where small businesses flourish, governance works harder than enterprise to preserve the environment in which commerce occurs. Where governance fails, businesses can make twice the effort and still earn a fraction of the return.

Until Pakistan understands this distinction, SME policy will continue to fund individual interventions while leaving the operating system of enterprise unrepaired.

From Yiwu to Istanbul to Pakistan’s smallest rural settlements, the lesson is consistent: small businesses flourish when the surrounding system works harder than the entrepreneur.

The company caters to a wide range of sectors including food & beverages, surgical instruments, consumer goods, textile etc. The company belongs to The Lakson Group of companies.

Pattern of Shareholding

As of June 30, 2025, MERIT has a total of 199.96 million shares outstanding which are held by 2114 shareholders. Associated companies, undertaking and related parties have the largest stake of 81.54 percent in the company followed by local general public holding 14.18 percent shares. NIT & ICP have 2.30 percent stake in MERIT.

The remaining ownership is distributed among other categories of shareholders.

Financial Performance (2021-25)

Barring year-on-year decline in 2025, MERIT’s topline rode an upward trajectory over the period under consideration. However, the company never posted net profit during this period.

The company’s gross margin dived into negative zone in 2020 and 2021 and then recovered thereafter only to post a negative value again in 2025. Its operating margin which stayed in the negative territory until 2021 rebounded thereafter only to fall back in 2025. The detailed performance review of the period under consideration is given below.

After a dip in 2020, MERIT’s topline resumed its uphill journey in 2021 with 34.48 percent year-on-year rise to clock in at Rs.2902.559 million in 2021. As economic activities began to recommence after the lockdown period, MERIT started receiving new orders resulting in a healthier topline.

However, topline growth couldn’t trickle down to produce a healthier bottomline amid high cost of raw materials, Pak Rupee depreciation, hike in energy prices and lesser productivity and efficiency of company’s old printing machines. While MERIT couldn’t register gross profit in 2021, it was able to significantly curtail its gross loss by 78.63 percent year-on-year in 2021 which clocked in at Rs.42.40 million.

Administrative expense ticked down by 2.93 percent year-on-year in 2021 as the company trimmed down its workforce from 264 employees in 2020 to 206 employees in 2021. Conversely, distribution expense spiked by 14.54 percent on account of higher outward carriage charges incurred due to recovery of sales volume.

Other income greatly propelled the operating performance of MERIT in 2021 as it grew by 387.30 percent on the back of insurance claim, capital grant income, exchange gain, impairment reversal and scrap sales.

The company’s operating loss narrowed down by 47.71 percent year-on-year in 2021 to clock in at Rs.217.75 million. Lower discount rate helped MERIT cut down its finance cost by 7.38 percent in 2021. This translated into 18.44 percent lower net loss to the tune of Rs.564.98 million in 2021. Loss per share also plummeted to Rs.6.84 in 2021 from Rs.8.59 in 2020.

In 2022, MERIT witnessed 44.1 percent year-on-year rise in its net sales which clocked in at Rs. 4181,647 million. This was backed by both upward price revision and increased sales volume. This enabled the company to register gross profit of Rs.252.92 million in 2022 after two sustained years of gross loss.

GP margin clocked in at 6.05 percent in 2022. Administrative expense surged by 14.78 percent year-on-year in 2022 due to higher payroll expense on account of inflationary pressure despite drop in number of employees to 188 in 2022.

Higher sales volume and increase prices of POL products also drove up the distribution expense by 44.21 percent in 2022. MERIT posted operating profit of Rs.92.77 million in 2022 with OP margin of 2.22 percent. The company was able to record positive operating result in 2022 after three unrelenting years of operating loss.

Despite hiking discount rate, the company was able to reduce its finance cost by 19.51 percent year-on-year in 2022 due to lesser external borrowings obtained during the year. The company registered net loss of Rs.168.17 million, down 70.23 percent year-on-year. Loss per share also dropped to Rs.0.84 in 2022.

The company registered topline growth of 51.63 percent in 2023. Net sales clocked in at Rs. 6340.624 million in 2023. Besides higher sales volume, the company was able to pass on the impact of cost hike to its customers in 2023 which improved its margins.

Moreover, the company has also been undertaking massive CAPEX for the installation of new plant & machinery to increase its productivity and cut down its cost. This resulted in 94.37 percent rise in gross profit with GP margin jumping up to 7.75 percent in 2023.

Administrative expense escalated by 9.98 percent year-on-year in 2023 due to higher payroll expense as number of employees grew to 194 in 2023. Distribution expense hiked by 22.49 percent in 2023 on the back of higher sales volume which pushed up the freight charges.

Other income strengthened by 63.29 percent in 2023 on account of hefty scrap sales made during the year. However, its impact was nullified by 389.29 percent surge in other expense in 2023 which was the result of enormous provisioning done for ECL.

Operating profit magnified by 200.47 percent in 2023 with OP margin climbing up to 4.40 percent. Finance cost surged by 30.82 percent year-on-year in 2023 due to unparalleled level of discount rate, This was despite the fact that the company paid two long-term loans in 2023.

Net loss of Rs.189.91 million posted by MERIT in 2023 was 12.93 percent higher than that of 2022. Loss per share also surged to Rs.0.95 in 2023.

MERIT’s topline inched up by 4.70 percent to clock in at Rs.6638.477 million in 2024. During the year, the company also received an export order worth Rs. Higher cost of sales resulted in 6.81 percent decline in gross profit in 2024 with GP margin falling down to 6.90 percent.

Administrative expense surged by 36.36 percent in 2024 due to higher payroll expense on account of inflationary pressure. This was despite the fact that the company streamlined its workforce from 194 employees in 2023 to 181 employees in 2024.

Elevated travelling & conveyance as well as repair & maintenance charges also inflated administrative expense in 2024. Distribution expense also inched up by 10.69 percent during the year due to hefty carriage outward charges incurred during the year.

The transaction of sale and leaseback of land and building with SIZA Services (Private) Limited, an associated company, resulted in gain on sale of fixed assets in 2024 which pushed up other income by 53.37 percent in 2024. Other expense contracted by 69.11 percent in 2024 due to high-base effect as the company recorded massive allowance for ECL in 2023.

MERIT’s operating profit declined by 10.83 percent to clock in at Rs.248.57 million in 2024 with OP margin diving down to 3.74 percent. Finance cost inched up by just 2.16 percent in 2024 due to higher discount rate while the company’s outstanding borrowings significantly shrank during the year.

MERIT’s net loss tumbled by 1.87 percent to clock in at Rs.186.361 million in 2024 with loss per share of Rs.0.93.

In 2025, MERIT recorded 20.45 percent thinner topline to the tune of Rs.5280.933 million. This was the first time after 2020 that the company’s net sales deteriorated year-on-year.

While the export sales significantly increased during the year, local sales receded due to increased competition and reduced demand. During the year, the company entered into an agreement to dispose its flexible packaging unit which also squeezed the sales volume. MERIT’s export sales comprised of sales made to Kenya.

Lower sales volume coupled with constricted margins proved to be a double whammy for MERIT and translated into gross loss of Rs.28.733 million in 2025. This was the first time after 2021 that the company posted gross loss. Administrative expense spiked by 44.24 percent in 2025 primarily due to higher payroll expense and software license and implementation fee incurred during the year. Increased salaries were despite the fact that the company further rationalized its workforce to 170 employees in 2025.

Distribution expense surged by 28.33 percent in 2025 due to increased carriage outward charges incurred on the back of export sales. High-base effect due to gain recognized on the disposal of fixed assets in the previous year pushed down other income by 45.58 percent in 2025.

Lesser legal & professional charges squeezed other expense by 28.44 percent in 2025. MERIT posted operating loss of Rs.350.305 million in 2025. Finance cost lowered by 47.95 percent in 2025 due to monetary easing and repayment of sponsor loan during the year. Net loss mounted by 221.78 percent to clock in at Rs.599.667 million in 2025. This translated into loss per share of Rs.3.00 in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, MERIT recorded 43.55 percent decline in its net sales which clocked in at Rs.2537.79 million. This was mainly on the back of disposal of Flexible packaging unit. Decline in sales coupled with consistent cost increase squeezed gross profit by 67 percent in 9MFY26 with GP margin clocking in at 3.17 percent versus GP margin of 5.43 percent recorded in 9MFY25.

Constant workforce rationalization and limited operations post divesture of Flexible packaging unit pushed down administrative expense by 3 percent in 9MFY26. Lower sales volume also compressed distribution expense by 23.89 percent in 9MFY26.

Other income strengthened by 45.19 percent in 9MFY26 due to gain recognized on the disposal of Gravure machinery pertaining to Flexible packaging unit. Other income was greatly offset by 55.87 percent spike in other expense in 9MFY26 likely due to provisioning done for WWF and ECL.

MERIT posted operating loss of Rs.109.31 million in 9MFY26 versus operating profit of Rs.28.42 million posted in 9MFY25. What turned tables for MERIT was gain worth Rs. 505.66 million recognized on the disposal of assets classified as held for sale.

Finance cost also shrank by 44.30 percent in 9MFY26 due to reduced reliance on external financing post liquidity injection by asset sale. This enabled the company to register net profit of Rs.80.55 million in 9MFY26 with EPS of Rs.0.40 versus net loss of Rs.169.548 million and loss per share of Rs.0.85 recorded in 9MFY25.

Future Outlook

Due to consistent losses, the company’s accumulated loss stood at Rs.1435.621 million as of March 30, 2026, down 18.74 percent year-on-year. The company is utilizing the funds received from the sale of its land and buildings to pay off its debt and get rid of a large portion of finance cost as a strategy to push its bottomline into positive zone.

The company is also diligently working to enhance its customer base in order to ensure regular stream of revenues. This is evident in the expansion of its export sales. These strategic moves warranty new chapter of growth and turnaround for MERIT.

Pattern of Shareholding

As of June 30, 2025, GTYR has a total of 121.933 million shares outstanding which are held by 5466 shareholders. Associated companies, undertakings and related parties which include Bibojee Services (Private) Limited and Pakistan Kuwait Investment Company (Private) Limited, collectively hold 57.79 percent shares of the company. These are followed by local general public having 26.13 percent stake in the company. NIT & ICP accounts for 5.02 percent shares of GTYR while banks, DFIs and NBFIs hold 2.24 percent shares. Around 2.15 percent of the company’s shares are held by its Directors, CEO, and their spouse and minor children, 1.76 percent by Modarabas & Mutual Funds and 1.15 percent by Insurance companies. The remaining shares are held by other categories of shareholders.

Historical Performance (2021-25)

Over the period under consideration, GTYR’s topline posted year-on-year rise in 2021, 2022 and 2024. Its bottomline posted growth only in 2021 and 2024. In 2023 and 2025, the company also registered net losses. GTYR’s margins which nosedived until 2020 rebounded in 2021. In 2022, the margins recorded a downtick. In 2023, gross margin strengthened, operating margin almost stayed afloat and net margin entered negative territory. This was followed by a rebound in all the margins in 2024. In 2025, GTYR’s margins deteriorated. The detailed performance review of the period under consideration is given below.

GTYR’s net sales greatly revived in 2021 to clock in at Rs.13,923.52 million, up 58.34 percent year-on-year. Robust sales was the result of increased focus on replacement market sales, lesser availability of smuggled tyres, 56 percent higher export sales and demand growth in farm and passenger car tyres in 2021. Better sales mix, improved export sales and the company’s ability to increase its prices culminated into 100.61 percent higher gross profit recorded in 2021. GP margin climbed up to 15.11 percent in 2021 from 11.92 percent in the previous year. 43.72 percent elevated distribution expense incurred during the year was the consequence of higher payroll expense, rigorous advertising and promotion drives undertaken during the year as well as higher freight & insurance charges incurred due to improvement in demand. Administrative expense also surged by 14.34 percent in 2021 due to higher payroll expense as well as increased legal & professional charges incurred during the year. In order to cope up with increased production and sales, the company expanded its workforce to 1133 employees in 2021. Other income strengthened by 166.64 percent in 2021 due to higher scrap sales, exchange gain, re-measurement gain on GIDC liability and gain on termination of lease. Other expense also escalated by 276.80 percent in 2021 due to higher profit related provisioning and generous donations given out during the year. GTYR’s operating profit enhanced by 219.85 percent in 2021 with OP margin picking up to 9.30 percent from 4.61 percent in 2020. Finance cost slid by 40.62 percent in 2021 due to monetary easing. The company posted net profit of Rs.575.656 million in 2021 with EPS of Rs.4.7 and NP margin of 4.11 percent. This was against the net loss of Rs.332.091 million and loss per share of Rs.2.72 posted in 2020.

In 2022, GTYR’s posted 33.5 percent higher net sales to the tune of Rs.18,588.299 million. Not only did the replacement market sales showed improvement in 2022, OEM sales pertaining to truck, bus, light truck and passenger cars also improved over the last year. Global commodity super cycle, higher freight charges due to elevated fuel prices and shortage of containers, Pak Rupee depreciation, usage of LPG due to low availability of natural gas and overall high indigenous inflation resulted in GP margin falling down to 13.2 percent in 2022. In absolute terms, gross profit increased by 16.58 percent in 2022. Distribution expense escalated by 15.12 percent in 2022 due to higher payroll expense of sales force, increased advertising & promotion budget and elevated freight charges. Administrative expense ticked up by 5.4 percent in 2022 due to slight growth in payroll expense and higher provisioning for ECL booked during the year. GTYR cut down its workforce to 1114 employees in 2022. Other income slid by 28.22 percent in 2022 due to absence of exchange gain, gain on termination of lease and re-measurement gain on GIDC liability. Other expense soared by 155.19 percent in 2022 due to hefty exchange loss on account of Pak Rupee depreciation. GTYR’s operating profit posted a paltry 5.39 percent growth in 2022 with its OP margin falling down to 7.34 percent. Finance cost spiraled by 48.36 percent in 2022 due to higher discount rate and increased working capital financing. GTYR’s net profit sank by 37.82 percent to clock in at Rs.356.065 million in 2022 with EPS of Rs.2.92 and NP margin of 1.92 percent.

After two successive years of topline growth, GTYR’s topline succumbed to economic and political pressure and dropped by 19.2 percent year-on-year to clock in at Rs.15,018.659 million in 2023. Replacement market sales were badly affected due to monsoon rain the 1QFY23 and dumping of smuggled tyres in Pakistan. Sales to OEM were also affected due to restriction on the opening of Letter of Credit due to thin FOREX reserves of the country. GTYR, itself was also affected due to import restrictions which resulted in curtailed capacity utilization of 38.53 percent recorded in 2023 versus capacity utilization of 65.1 percent recorded in the previous year. In absolute terms, gross profit lowered by 6.57 percent in 2023, however, GP margin improved to 15.26 percent due to better sales mix, price increase and enhanced focus on replacement market and export sales. Lower sales volume resulted in 8.93 percent decline in distribution expense in 2023. The company also carried out lesser advertisement and promotion activities in 2023. Lower legal & professional charges and lesser provision for ECL resulted in 6.1 percent lower administrative expense in 2023. Employee headcount was also brought down to 1078 in 2023. 23 percent year-on-year reduction in other income in 2023 was primarily the result of lower scrap sales and a downtick in gain on sale of operating fixed assets. Other expense surged by 78.94 percent in 2023 due to whopping exchange loss incurred during the year. GTYR’s operating profit contracted by 19.48 percent in 2023 with OP margin staying almost intact at 7.32 percent. Finance cost surged by 72.74 percent in 2023 due to unprecedented level of discount rate. The company posted net loss of Rs.167.364 million in 2023 with loss per share of Rs.1.37.

The tables seem to have turned for GTYR as it was able to record staggering 36.75 percent stronger topline to the tune of Rs.20,538.57 million in 2024. This was the result of increased focus on replacement market, strengthening foothold in export market and progressively more diversified OEM portfolio. Better sales mix, higher prices, stability in the value of Pak Rupee off-late and recovery in the sale of tractor tyres resulted in 43 percent higher gross profit recorded in 2024 with GP margin of 15.96 percent. Distribution and administrative expense surged by 29.20 percent and 31.14 percent respectively primarily due to increased payroll expense as well as freight & insurance charges incurred during the year. GTYR expanded its workforce from 1078 employees in 2023 to 1099 employees in 2024. Other income grew by 44.69 percent in 2024 predominantly due to hefty exchange gain. Other expense slid by 91.56 percent during the year as no exchange loss was recorded in 2024. GTYR’s operating profit enhanced by 97.86 percent in 2024 with OP margin clocking in at 10.60 percent. Finance cost surged by 30 percent in 20024 due to elevated discount rate and increased utilization of working capital lines. The company recorded net profit of Rs.229.06 million in 2024 with EPS of Rs.1.88 and NP margin of 1.12 percent.

In 2025, GTYR’s net sales plummeted by 13.34 percent to clock in at Rs.17,799.710 million. This was mainly on account of lower farm tyre sales on the back of lower wheat price which wreaked havoc on the purchasing power of farmers. Export sales dwindled by 21.69 percent to clock in at Rs. 231 million in 2025 due to border tensions and change of distributor in Afghanistan. Passenger car tyre and light truck tyres posted some improvement during the year owing to improved macroeconomic backdrop. Replacement market sales also picked up during the year. High prices of certain raw materials, increase in minimum wage rate and upward revision in gas prices resulted in 30.69 percent thinner gross profit in 2025 with GP margin falling to its 5-year low level of 12.76 percent. Lower sales volume of farm tyres resulted in 6.97 percent drop in distribution expense in 2025. Conversely, administrative expense ticked up by 5.76 percent in 2025 due to increase in payroll expense on account of inflationary pressure. GTYR recorded exchange loss during the year which pushed up its other expense by 45.34 percent. Other income slid by 2.45 percent in 2025 as the company didn’t record exchange gain. Operating profit deteriorated by 45.54 percent in 2025 with OP margin ticking down to 6.65 percent. Finance cost slid by 19.60 percent in 2025 due to monetary easing. GTYR posted net loss of Rs.366.077 million in 2025 with loss per share of Rs.3.0.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, GTYR posted 13.11 percent year-on-year downtick in its net sales which clocked in at Rs.12,131.503 million. During the 1HFY26, farm tyre segment underperformed due to poor farm economics. The demand recovered during the 3QFY26; however, the company couldn’t take the optimum benefit of the demand recovery as it conducted a production shutdown during the quarter to manage raw material availability in the wake of Middle East crisis which caused supply chain impediments. Export sales also deteriorated by 76.51 percent during 9MFY26 to clock in at Rs.39 million due to the closure of Pak-Afghan border and regional tesnions. While other segments – passenger cars, truck & bus, OTR and motorcycles – performed well during the period under consideration owing to monetary easing, stronger Pak Rupee and gradual macroeconomic recovery, it couldn’t sustain the gross profit of the company which fell 25.27 percent in 9MFY26. GP margin also descended from 14.11 percent in 9MFY25 to 12.14 percent in 9MFY26 mainly on account of elevated energy cost. Lower sales volume resulted in 1.28 percent diminution in distribution expense in 9MFY26. Conversely, administrative expense ticked up by 6.89 percent during the period owing to inflationary pressure. Operating profit weakened by 43.43 percent in 9MFY26 with OP margin clocking in at 5.20 percent versus 8 percent in 9MFY25. Monetary easing and efficient utilization of financing facilities resulted in 14.61 percent decline in finance cost in 9MFY26. Share of profit from associated companies also mounted by 144.91 percent during the period. On the other hand, hefty revenue tax marred the bottomline in 9MFY26. GTYR recorded net loss of Rs.343.583 million with loss per shares of Rs.2.82 in 9MFY26 versus net profit of Rs.63.786 and EPS of Rs.0.52 posted in 9MFY25.

Future Outlook

GTYR is increasingly diversifying its portfolio by introducing new sizes of tyres for SUV/crossover segments. The company is also striving to increase its export sales in both OEM and RM segments. The introduction of Punjab Tractor Scheme, Kissan card subsidized financing and warehousing receipt programs is also expected to boost local demand. Improved farm economics and flood rehabilitation drives by the government may also buttress demand dynamics in the farm tyre segment.

GTYR is also focusing on cost optimization and raising its operational efficiency. The recently commissioned solar power project will reduce energy cost. The government is also taking steps to curbs the smuggling of tyres. All these factors are expected yield positive results and cast encouraging impact on the profitability and margins of GTYR.

That has implications for oil-importing countries, especially those that are more exposed to balance-of-payments worries. Pakistan is a basket case, and we have an uncertain future. That is why the stock market is jittery, and the irrational expectations of any rate cut have completely died down.

The SBP would maintain the status quo in the policy review expected by the end of July. A more prudent approach would be to wait and see until December, as the sword will keep hanging over us until the fear of war is completely over.

The government and stock market punters were jubilant about better indicators, such as falling inflation and rising home remittances. However, the party spoiler is oil prices. In a matter of days, prices jumped by 15–20 percent from their lows, and oil is now hovering around $80 per barrel. Some say it will remain below $90, while others say it may cross $100. Whatever the case, anything above $80 is a worry for Pakistan.

When the war started, a few countries began using their strategic petroleum reserves, while China had bought in bulk before the war started and reduced its buying in the last few months. Now, strategic petroleum reserves are low and cannot be used as a buffer. In fact, countries are looking for lower prices to refill them. The other question is how long China will continue buying less.

The fear of higher demand amid the closure of the Strait of Hormuz is not good for the oil outlook. Pakistan cannot do much but wait. Our efforts to defuse the tension were fruitful until the MOU was reached, but our role may not remain the same going forward. The question is how to convert the geopolitical mileage we gained into a geopolitical dividend.

All one can see are headwinds. Analysts were afraid of this, as the MOU was a little too tilted towards Iran, and realistic people were assuming the risk of the US swaying away from it. Some say that Trump might be using it to secure fresh approval for another 60 days of war.

Whatever it is, the situation remains fluid. If there is any thinking about accelerating economic growth in Pakistan, that must stop. The quest to maintain stability must continue. The SBP’s foreign exchange reserves have reached $18.4 billion—the highest since October 2021. That provides comfort that no immediate crisis is in the offing and that the currency is in a comfortable position, although a growing REER demands some depreciation.

The bottom line is that uncertainty remains high, and the focus should be on keeping stability intact and waiting for a favourable external situation before thinking about accelerating growth.

The Strait of Hormuz was reopening, stranded tankers were moving again, and oil prices were falling back towards pre-war levels. By the end of June, the market was no longer focused on shortages. Instead, traders were beginning to worry that too much oil could arrive at the same time.

That calm did not last. The immediate fear of a prolonged disruption was fading. Brent crude was trading close to $73 a barrel on June 29 after falling sharply from its wartime highs. Gulf production was recovering, cargoes were returning to the market, and buyers had already secured alternative supplies. Prices weakened further in early July as the market shifted its attention towards rising supply and softer demand. The possibility of an oil glut began to look more credible than another price spike.

Then geopolitics returned. Fresh attacks on commercial vessels, followed by renewed military exchanges between the United States and Iran, reminded the market that Hormuz may be open, but it is still not safe. Brent quickly climbed back towards $80 a barrel, rising roughly 8 percent from its June 29 level.

The reversal was driven less by demand and more by fear. The risk of another disruption returned, and traders rebuilt the geopolitical premium that had only recently disappeared.

The market is no longer dealing with a simple question of whether Hormuz is open or closed. It is operating somewhere in between.Tankers are moving, but shipowners remain cautious. Insurance and security costs are high, and LNG traffic remains weak. Oil can pass through the Strait, but not with the same speed, confidence, or predictability as before the conflict.

The recovery in supply is also uneven.Gulf crude production and exports have improved significantly, easing fears of an immediate shortage. But crude is only one part of the story. Refineries across the region are taking longer to recover, while exports of diesel, jet fuel, LPG, and other petroleum products remain below normal levels.

This means crude prices can look relatively comfortable while refined fuel markets remain tight. That matters for countries like Pakistan, which are exposed not only to crude oil international price but also to international petrol and diesel prices. A softer crude price does not automatically translate into equal relief at the pump if refining margins stay elevated.

The earlier expectation of a large oil surplus has therefore become less certain. A surplus could still emerge if Gulf production continues to recover, Hormuz remains open and global demand stays weak. But that outcome depends on stability.

Every tanker attack, military strike or fresh threat to the Strait delays the return to normal. Even when oil is available, prices can rise sharply if buyers are unsure whether it can reach them safely.

For Pakistan, the situation is less comfortable than it appeared at the end of June. Lower oil prices had offered some relief for the import bill, inflation, and domestic fuel pricing. Sustained Brent prices near $70 would have been helpful at a time when external finances remain tight.

The shortage may have eased, but stability has not returned. The issue is no longer whether oil is available. It is whether that oil can move safely.

Pattern of Shareholding

As of June 30, 2025, AGIL has a total of 36 million shares outstanding which are held by 3,668 diverse shareholders. Foreign investors represent the largest shareholding category of AGIL holding around 42.24 percent shares followed by local individuals accounting for 35 percent shares of the company.

Thal Limited which is an associated company of AGIL owns 7.35 percent of its shares while financial institutions have 7.20 percent stake in AGIL.

Joint stock companies and Mutual funds have a stake of 3.93 percent and 3.59 percent respectively in AGIL.

The remaining ownership is distributed among other categories of shareholders.

Historical Performance (2021-25)

Over the period under consideration, AGIL’s topline plunged in 2020 and 2023. AGIL reported net losses in 2023 and 2024. AGIL’s margins which had been narrowing down until 2020, registered staggering recovery in 2021.

However, the upturn couldn’t prove to be sustainable as margins drastically fell in the subsequent three years. In 2025, all the margins ticked up. The detailed performance overview of the company is given below.

2021 proved to be the year of revival for AGIL and made up for its losses and dismal sales performance in the past year. In 2021, AGIL registered a splendid year-on-year growth of 84.94 percent year-on-year in its topline which clocked in at Rs.6969.98 million. This was the result of resurgence in agricultural and industrial activity in 2021.

Favorable foreign exchange parity and low interest rate instilled growth in the automobile sector. The government also provided tax reliefs on cars with low engine capacity of 1000 cc, resulting in 61 percent higher sales volume of passenger cars in 2021. Moreover, FED was reduced to 2.5 percent across all the car segments.

The company kept a check on its cost which was further supported by appreciation in the value of local currency. This translated into 481.70 percent year-on-year growth in gross profit with GP margin jumping up to 14.18 percent in 2021.

Distribution expense spiked by 63.78 percent year-on-year in 2021 due to rigorous advertising and promotion campaigns launched during the year coupled with higher freight and forwarding charges. Administrative expense slid by 13.54 percent year-on-year in 2021 due to considerably lower legal and professional charges incurred during the year.

Employee headcount grew to 727 in 2021. Net other income grew by 14 percent year-on-year in 2021 on account of higher dividend income from its subsidiary. Operating profit multiplied by 6144.34 percent in 2021 with OP margin rising up to 12 percent.

Finance cost grew by 4.65 percent year-on-year in 2021 despite monetary easing due to increase in lease liabilities coupled with the attainment of short-term running finances in 2021.

AGIL posted net profit of Rs.651.40 million in 2021, the highest among all the years under consideration, with an unparalleled NP margin of 9.35 percent and EPS of Rs.22.62. This was against the net loss of Rs.29.798 million and loss per share of Rs.1.03 recorded in 2020. In 2022, AGIL’s topline measured up by 28.52 percent year-on-year to clock in at Rs.8957.55 million.

However, stronger topline couldn’t trickle down into bottomline growth on account of higher cost of sales, elevated cost of borrowing, record high inflation and drastic depreciation of Pak Rupee.

The topline growth was the consequence of improved automobile sales during the first 10 months of FY22 on account of all-time high sales of passenger cars. Then SBP intervened and put restrictions on import of CKD units to safeguard the diminishing foreign exchange reserves of the country. This put a dent on the production and sales of automobiles towards the end of FY22.

Cost of sales grew by 32.73 percent year-on-year in 2022 on account of Pak Rupee depreciation and import restrictions which created supply chain impediments for AGIL.

Gross profit inched up by 3 percent year-on-year in 2022, however, GP margin marched down to 11.37 percent. Distribution expense magnified by 15.22 percent year-on-year in 2022 due to higher freight charges on account of increased sales volume and rise in the prices of POL products.

Focused advertisement campaigns also contributed towards higher distribution expense in 2022. Number of employees grew from 990 in 2021 to 1061 in 2022, resulting in higher payroll expense which drove up administrative expense by 23.58 percent in 2022.

AGIL incurred net other expense of Rs.131.48 million in 2022 due to massive exchange loss incurred on foreign currency transactions. Operating profit tapered off by 38.91 percent year-on-year in 2022 with OP margin slipping to 5.71 percent.

Finance cost hiked by 1593.35 percent year-on-year in 2022 as the company’s short-term financing greatly increased during the year and it also availed SBP refinance scheme for renewable energy. The bottomline declined by 53.33 percent year-on-year in 2022 to clock in at Rs.304.009 million with NP margin of 3.40 percent and EPS of Rs.8.44.

The automobile sales which started dropping towards the end of 2022 further worsened in 2023 on the back of import restrictions, tapering of auto financing due to higher discount rate and also because of imposition of new taxes in the latest budget.

The devastating floods in the 1HFY23 wreaked havoc in the agricultural regions and took its toll on the tractor sales. The sluggish performance of automobile sector had the direct negative effect on the off-take AGIL. AGIL’s net sales declined by 40.43 percent to clock in at Rs.5336.12 million in 2023.

Due to lower production and sales volumes, cost of sales also slid, albeit with a lower magnitude of 35.55 percent year-on-year.

Gross profit measured down by 78.51 percent year-on-year in 2023 with GP margin narrowing down to 4.10 percent. Due to demand destruction, the company greatly reduced its advertising budget in 2023. This coupled with lower freight cost resulted in 28.92 percent plunge in distribution expense in 2023.

AGIL significantly trimmed down its workforce to 770 in 2022, however, inflation didn’t allow administrative cost to shrink accordingly and it stayed almost at the same level as it was in 2022.

As against 2022, where the company booked net other expense due to high exchange loss, in 2023, AGIL posted net other income of Rs.162.81 million on account of encouraging dividend income from Agriauto Stamping Company (Private) Limited. However, this couldn’t do any good to the operating results of the company.

AGIL’s operating profit slid by 91.29 percent year-on-year in 2023 with OP margin drastically falling down to 0.84 percent. Finance cost escalated by 45.59 percent year-on-year in 2023 due to higher discount rate coupled with increased long-term financing obtained under SBP refinance scheme for renewable energy. AGIL incurred net loss of Rs.44.28 million in 2023 with loss per share of Rs.1.23.

AGIL recorded 11.1 percent year-on-year growth in its net sales which clocked in at Rs.5927.23 million in 2024. Due to continued decline in the OE business, the company started focusing on the replacement market and introduced new models in its aftermarket portfolio.

The company also targeted the UAE market in 2024 and recorded export sales worth $100,000 in 2024. The company also diversified into dye developing business in 2024.

Cost of sales hiked by 11.77 percent in 2024 due to heightened energy tariff and increase in the prices of raw materials. Gross profit slid by 5 percent in 2024 with GP margin sliding down to 3.51 percent.

Distribution expense multiplied by 36.16 percent in 2024 possibly due to increased advertisement and promotion budget as well as higher carriage & forwarding charges.

Administrative expense ticked up by 7.92 percent in 2024 due to higher payroll expense on account of inflationary pressure. This was despite the fact that the company streamlined its workforce from 698 employees in 2023 to 666 employees in 2024.

Stability in the value of local currency and no provisioning done for WWF and WPPF led to 96.60 percent drop in other expense in 2024. Other income also plummeted by 87.56 percent in 2024 due to high-base effect as the company received hefty dividend from Agriauto Stamping Company (Private) Limited in 2023.

The company recorded operating loss of Rs.153.57 million in 2024 versus operating profit of Rs.44.56 million recorded in the previous year. Finance cost also surged by 47.20 percent in 2024 on account of higher discount rate and increased utilization of working capital lines.

Debt-to-equity ratio surged from 42 percent in 2023 to 52 percent in 2024. AGIL posted net loss of Rs.275.718 million in 2024 with loss per share of Rs.7.66.

In 2025, AGIL’s net sales posted a staggering year-on-year growth of 30.96 percent to clock in at Rs.7762.17 million. Improvement in the macroeconomic indicators since the beginning of the year instilled enhancement in the economic activity.

Lower financing rates pushed up the automobile demand. New competitors also entered the market, providing customers with wide array of choices which led the existing players to keep the prices in check.

AGIL drove up its topline through increased sales volume and efficient sales mix with enhanced focus on passenger cars and two-wheeler sales.

This enabled the company to record 71.97 percent higher gross profit in 2025 with GP margin ticking up to 4.60 percent. Higher sales volume and focused advertising & promotion campaigns resulted in 33.44 percent greater distribution expense in 2025.

Administrative expense also picked up by 21.86 percent in 2025 due to higher payroll expense. Other expense surged by 962.43 percent in 2025 owing to exchange loss on foreign currency transactions.

However, other expense was conveniently offset by 1191.82 percent higher other income registered in 2025 on the back of hefty dividend income from subsidiary company recognized during the year.

AGIL’s subsidiary company, Agri Auto Stamping Company (Private) Limited diversified its product mix during the year and expanded into high-tensile sheet metal processing which led to stronger profit margins. AGIL posted operating profit of Rs.251.19 million in 2025 as against operating loss of Rs.153.57 million recorded in 2024.

OP margin was recorded at 3.24 percent in 2024. Despite monetary easing, finance cost escalated by 35.41 percent in 2025 due to higher utilization of working capital lines. Debt-to-equity ratio mounted to 65 percent in 2025.

AGIL posted net profit of Rs.98.975 million with EPS of Rs.2.75 in 2025. This was against net loss of Rs.275.718 million and loss per share of Rs.7.66 posted in 2024. NP margin clocked in at 1.28 percent in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, AGIL registered a tremendous 49.16 percent year-on-year growth in its net sales which clocked in at Rs.7832.23 million. This was the result of revival of automobile sector due to improved macroeconomic conditions particularly lower interest rate, restrictions on the import of used vehicles, tariff rationalization and lucrative models and pricing offered by the OEMs in all the vehicle categories.

The company not only registered a higher sales volume during the period under review but also tweaked its sales mix in favor of passenger cars and two-wheelers. This enabled the company to record 100.31 percent stronger gross profit in 9MFY26 with GP margin clocking in at 6.37 percent versus GP margin of 4.74 percent recorded in 9MFY25.

Higher sales volume and enhancement of operations resulted in 40 percent spike in distribution expense and 19.77 percent spike in administrative expense in 9MFY26. Other expense mounted by 26.13 percent in 9MFY26 due to greater exchange loss on foreign currency transactions.

However, other expense was completely wiped off by 14.13 percent stronger other income recorded in 9MFY26 which was the result of superior dividend income from subsidiary - Agri Auto Stamping Company (Private) Limited.

AGIL posted net other income of Rs.458.41 million in 9MFY26, up 13.75 percent year-on-year. Operating profit strengthened by 68 percent in 9MFY26 with OP margin clocking in at 6.79 percent versus OP margin of 6 percent recorded in 9MFY25.

Finance cost ticked up by 2.69 percent in 9MFY26. The recognition of deferred tax asset of Rs.232.425 million in 9MFY26 also supported the bottomline which grew by 168.14 percent to clock in at Rs.541.115 million. This translated into EPS of Rs.15.03 and NP margin of 6.91 percent in 9MFY26 versus EPS of Rs.5.61 and NP margin of 3.84 percent registered in 9MFY25.

Future Outlook

Improved availability of CKD units due to ease of import restrictions will result in the improvement in capacity utilization of auto industry.

On the flipside, changes under National Tariff Policy 2025-26, NEV policy and liberalization on the import of used cars and import of electric vehicles and hybrid electric vehicles is taking its toll on the business volume of auto parts manufacturers.

AGIL is also enhancing its dye manufacturing capability in order to diversify its offerings.

The number matters because remittances once again did the heavy lifting for the external account. In FY26, they were comfortably higher than the country’s net trade deficit in goods and services. That is a very different picture from FY22, when the trade deficit had ballooned against remittances.

The longer trend is even more powerful. Remittances have more than doubled from USD19.4 billion in FY17 to USD41.6 billion in FY26. After slipping to USD27.3 billion in FY23, inflows recovered with a fresh peak in FY26.

The Gulf remains the backbone of this flow. Saudi Arabia led with USD9.78 billion, followed by the UAE at USD8.81 billion. The UK contributed USD6.33 billion, EU countries USD5.23 billion, other GCC countries USD3.93 billion, and the USA USD3.62 billion.

The UAE was the standout, adding nearly USD978 million over last year, followed by EU countries, Saudi Arabia and the UK.

But the fine print matters. May’s record USD4.25 billion inflow was helped by Eid timing and should not be treated as the new monthly base. June’s decline confirms that some normalization was always likely.

There is also a possibility that part of the recent surge, especially from the UAE, reflects repatriation of accumulated savings or wealth parked abroad, not only regular monthly income.

From July 1, remittances will still remain free for senders and families receiving them, but the government will no longer pick up the bill. Banks will now have to bear that cost themselves. That is fair, because they already gain from remittance flows.

The real test is whether they can keep the service fast, easy and competitive. If they make it costly or complicated, some money can quickly move back to hundi and hawala.

The bigger lesson remains unchanged. Remittances are Pakistan’s strongest external cushion, but they are not a development model. They support reserves, households and the rupee, but they cannot permanently cover for weak exports, low investment and poor domestic savings.

FY26 showed the strength of overseas Pakistanis. FY27 will test the strength of Pakistan’s remittance system. The record inflow has bought breathing space. The challenge is to keep it formal, keep it reliable, and turn it into productive capital.

The principal activity of the company is the manufacturing, marketing and distribution of intravenous infusions besides trading in pharmaceutical products, medical equipment and nutritional foods. OTSU is an indirect subsidiary of Otsuka Pharmaceutical Company Limited, Japan.

Pattern of Shareholding

As of June 30, 2025, OTSU has a total of 12.1 million shares outstanding which are held by 1549 shareholders. Associated companies, undertakings and related parties are the largest shareholders of OTSU accounting for 67.89 percent of its outstanding shares.

Local general public has 25.98 percent stake in the company while foreign general public holds 4.42 percent shares. The remaining shares are held by other categories of shareholders.

Historical Performance (2021-25)

OTSU’s topline posted year-on-year growth over the period under consideration; however, its bottomline ascended only in 2021 and 2025. In 2023 and 2024, the bottomline ended up in the negative zone. The margins of the company followed by an upward trajectory in 2020 and 2021 only to lose their footing in 2022 and 2023.

In 2024, gross margin continued to fall while operating margin picked up. In 2025, all the margins strengthened. The detailed performance review of the period under consideration is given below.

OTSU’s topline multiplied by 14.34 percent year-on-year to clock in at Rs.2546.28 million in 2021. This was primarily on the back of sales of clinical nutritional products. With the eruption of COVID-19, the medical devices business came under pressure but the company adeptly altered its sales mix to include clinical nutritional products to optimize its sales volume and earn better margins.

During 2021, the company produced 20.3 million bottles of IV solution and 14.6 million bottles of Plastic ampoules, resulting in the capacity utilization of 64.6 percent and 69.5 percent respectively.

During the year, the company also increased its production capacity to 31.4 million bottles of IV solutions and 21 million bottles of plastic ampoules as against the rated capacity of 20.3 million bottles and 14.6 million bottles respectively until 2020.

Cost of sales grew by only 4.51 percent year-on-year in 2021 as the year ended with stronger Pak Rupee coupled with cost optimization measures put in place by the company. Gross profit strengthened by 41 percent year-on-year in 2021 with GP margin climbing up to 33.20 percent from 26.90 percent in 2020.

Distribution and administrative expense rose by 4.26 percent and 9.1 percent respectively in 2021 due to higher payroll expense and elevated outward freight and handling charges. During the year, the company also introduced a new product OTSUFLOX (Ciprofloxacin).

Other income grew by a massive 133.57 percent in 2021 on the back of hefty exchange gain recognized during the year due to favorable exchange rates. Other expense plummeted by 21.27 percent year-on-year in 2021 as there were no exchange losses and provision against doubtful debts.

Operating profit grew by 170.93 percent in 2021 with OP margin climbing up to 19.18 percent from 8 percent in 2020. Finance cost slid by 74 percent year-on-year in 2021 due to lower discount rate coupled with lesser outstanding borrowings as the company settled its short-term running finance during the year.

Due to tremendous profit, the company’s equity grew. This translated into gearing ratio of 41.85 percent versus 89.57 percent in the previous year. Net profit grew by 324.23 percent year-on-year to clock in at Rs.386.33 million in 2021. This translated into NP margin of 15.17 percent and EPS of Rs.31.93 in 2021 as against NP margin of 4 percent and EPS of Rs.7.53 recorded in the previous year.

In 2022, 12 percent year-on-year growth was recorded in OTSU’s topline which clocked in at Rs.2851.73 million. This was the result of streamlined sales mix. Clinical nutrition products drove up sales in 2022 while medical equipment segment continued to stay under pressure.

The capacity utilization of IV solutions grew to 70 percent in 2022 while plastic ampoules segment posted a reduced capacity utilization of 47 percent. Double digit inflation, depreciation of Pak Rupee and high energy charges pushed the cost of sales up by 13.17 percent in 2022.

Gross profit inched up by 9.64 percent year-on-year in 2022 with GP margin marginally dipping to 32.49 percent. Higher freight charges, advertisement and promotional expense coupled with increased payroll expense resulted in 25.16 percent year-on-year hike in distribution expense in 2022.

Administrative expense also rose by 31.86 percent year-on-year in 2022 despite downtick in the number of employees to 373 in 2022. This was the effect of unprecedented level of inflation and the related rise in salaries and wages.

Other income tumbled by 43.52 percent year-on-year in 2022 due to no exchange gain recorded in 2022. Conversely, other expense grew by 60.81 percent year-on-year on account of exchange losses. Operating profit slumped by 23.98 percent year-on-year in 2022 with OP margin slipping to 13 percent.

Finance cost continued its downward journey despite higher discount rate as the company paid off its long-term loans. Short-term loans slightly increased in 2022 but most of them were obtained from related parties at subsidized rates.

The gearing ratio further tapered off to 38.36 percent in 2022 as equity grew due to profit reocrded over the years. Net profit shrank by 40 percent in 2022 to clock in at Rs.231.80 million with NP margin of 8.1 percent. EPS slipped to Rs.19.16 in 2022.

In 2023, OTSU’s topline inched up by 6.43 percent to clock in at Rs.3035.09 million. Medical devices segment was still struggling during the year, however, the new ORS sachet launched by the company during the year received positive response from the market.

While DRAP approved price increase w.e.f August 2022, massive decline in the value of local currency, persistent hike in fuel, gas and power prices as well as implementation of final sales tax on both the purchase of pharmaceutical inputs and sale of finished goods drove up cost of sales by 24.21 percent in 2023.

Gross profit slid by 30.51 percent in 2023 with GP margin, diving down to 21.22 percent. Distribution expense inched up by 3.19 percent in 2023 due to inflationary pressure. Administrative expense went down by 10.31 percent in 2023 due to lower payroll expense as headcount was reduced to 362 in 2023.

Other income registered a staggering rise of 68 percent in 2023 due to hefty gain recorded on the sale of fixed assets, reversal of impairment loss on Orthopedic knee implant kits as well as higher scrap sales and late charges received from Hospital Supply Corporation.

The effect of robust other income was completely wiped off by 77.47 percent hike in other expense on account of exchange loss. Operating profit dwindled by 90.34 percent in 2023 with OP margin sliding down to 1.18 percent.

Finance cost mounted by a massive 863.59 percent in 2023 due to unprecedented level of discount rate and increase in the external borrowings particularly for the renovation of its Line-II facility. Gearing ratio climbed up to 57.7 percent in 2023. OTSU recorded net loss of Rs.7.207 million in 2023 with loss per share of Rs.0.60.

In 2024, OTSU’s net sales ticked up by 4.24 percent to clock in at Rs.3163.87 million. During the year, the company faced production challenges due to ageing of its machinery. This also resulted in a decline in rated capacity of I.V solutions and plastic ampoules to 28.6 million bottles and 14.1 million bottles respectively in 2024.

During the year, the company produced 18.7 million bottles of I.V solutions, down 13.02 percent year-on-year and 11.8 million bottles of plastic ampoules, down 3.28 percent year-on-year. One significant development during the year was the introduction of “Alpha berry plus” sachet in 2024 in its nutraceutical segment.

The company also replaced its previous major distributor by appointing “M/s. UDL Distribution (Pvt.) Limited” for Karachi and various other distributors for southern areas. This greatly helped the company with the payment terms, cash flow and liquidity.

Cost of sales mounted by 8.18 percent in 2024 due to unprecedented level of inflation, Pak Rupee depreciation as well as high electricity and gas prices. GP margin fell to its lowest level of 18.24 percent in 2024. Distribution expense ticked up by a paltry 2.98 percent in 2024 due to lower advertising & promotion charges.

Administrative expense escalated by 16.39 percent in 2024 due to higher payroll expense. This was despite the fact that the company streamlined its workforce from 362 employees in 2023 to 345 employees in 2024.

Other income grew by 83.89 percent while other expense shrank by 44.29 percent in 2024 due to hefty exchange gain recorded during the year on account of mark-to-market valuation of JPY currency loan obtained M/s. Otsuka Pharmaceutical Factory, Inc., Japan (OPF).

OTSU’s operating profit improved by 239.49 percent in 2024 with OP margin climbing up to 3.85 percent. Finance cost mounted by 60 percent in 2024 due to monetary tightening as well as new loan of JPY 300 million obtained from OPF.

While the company’s equity shrank due to higher accumulated losses, robust bank balances resulted in a reduced gearing ratio of 49.58 percent in 2024. OTSU’s net loss tapered off by 33.91 percent to clock in at Rs.4.76 million in 2024. This translated into loss per share of Rs.0.39 in 2024.

2025 appears to be a turning point for the company as its net sales posted a staggering year-on-year growth of 19.46 percent in 2025 to clock in at Rs.3779.52 million. This was due to better sales volume of clinic nutrition segment and strategic price adjustment implemented during the year.

OTSU also launched new products - “Falitop” and “Gen-DM MF - which received great market traction and greatly reinforced its clinical nutrition segment. Cost of sales grew by 12.73 percent in 2025 which was way beneath the topline growth. This was due to effective cost management and operational efficiency. This resulted in 49.64 percent stronger gross profit with GP margin rising up to 22.84 percent in 2025.

Distribution expense escalated by 37.36 percent in 2025 due to development of sales force, higher salaries of sales personnel and increased promotional activities undertaken during the year.

The company also incurred higher freight charges as it changed its logistics model to door-to-door distributor warehouse based model which not only reduced the rate of product deterioration but also shortened the lead time and cash cycle. 31.78 percent spike in administrative expense in 2025 was due to higher payroll expense and legal charges incurred during the year.

Workforce was also enhanced from 345 employees in 2024 to 408 employees in 2025. 4.83 percent plunge in other income and 40.95 percent hike in other expense during the year under review was the result of mark-to-market valuation of foreign currency denominated loans. OTSU recorded 33.77 percent improvement in its operating profit in 2025 with OP margin climbing up to 4.31 percent.

Finance cost tumbled by 94.26 percent in 2025 due to monetary easing. Conversely, its outstanding borrowing from the parent company (Otsuka Pharmaceutical Inc. Japan) increased. Gearing ratio ticked up to 50.32 percent in 2025. OTSU posted net profit of Rs.27.68 million in 2025 with EPS of Rs.2.29 and NP margin of 0.73 percent.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, OTSU recorded 13.95 percent enhancement in its net sales which clocked in at Rs.3040.72 million. As of March 30, 2026, 96.09 percent of the company’s sales are from local market and 3.91 percent from the Afghanistan market.

In terms of product mix, sale of IV solutions account for 88.65 percent of the revenue proceeds of the company.

In 3QFY26, sale to Afghanistan were halted due to border tensions which resulted in thinner sales during the quarter. However, overall the company posted topline growth in 9MFY26. Upward price adjustment and cost control measures enabled the company to record 81.45 percent growth in its gross profit in 9MFY26.

GP margin clocked in at 34.24 percent in 9MFY26 versus 21.50 percent in 9MFY25. Elevated advertising budget due to the launch of two new nutritional products – Neo-Mune and Once-Dialyze, induction of sales force and adoption of door-to-door distributor warehouse model resulted in 40.21 percent escalation in distribution expense in 9MFY26. Administrative expense surged by 10.13 percent in 9MFY26 likely due to higher payroll expense. Net exchange gain of Rs.122 million on the foreign currency loan due to the appreciation of Pak Rupee resulted in 146 percent higher other income and 39 percent lower other expense in 9MFY26. Operating profit grew by 313.16 percent in 9MFY26 with OP margin clocking in at 19.66 percent versus OP margin of 5.42 percent recorded in 9MFY25. Finance cost surged by 90.53 percent in 9MFY26 due to maturity of lease liability. Net profit progressed by 539.39 percent to clock in at Rs.380.07 million in 9MFY26. This translated into EPS of Rs.31.41 and NP margin of 12.50 percent in 9MFY26 as against EPS of Rs.4.91 and NP margin of 2.23 percent in 9MFY25.

Future Outlook

The company is in the process of achieving economies of scale through line extensions. Significant efforts are being made to sustain its competitive position in the market by launching new value added products particularly in the clinical nutrition and nutraceutical segments which offer greater margins. The company has also taken over its south supply from its distributor “Hospital supply corporation” and has appointed several other distributors. This has greatly improved the cash flow position of the company and reduced its borrowing requirements. Furthermore, positive exchange parity and controlled inflation will also serve as a boon for the company and boost its operating performance.

On the flipside, ongoing tension in the Middle Eastern region has led to acute fluctuations in the petroleum market. LDPE, a by-product of petroleum, is a significant raw material of OTSU and hence the company is directly exposed to any changes in the prices of POL products.

The good news for EV enthusiasts is that sales tax and duty concessions have been extended for another year. Some players are relying solely on CBUs, and they may continue this spree. However, clarity is missing on what will happen after one year, as the IMF is adamant about normalizing taxation on these vehicles. Some may defer EV production decisions, while everyone will keep selling CBUs and expect no price change in the mid-crossover segment.

REEVs will continue to receive the same treatment as EVs, as they may be gaining market size. Already, some EVs, which are CBUs, and one REEV, which is CKD, are selling like hot cakes. Expect more players to enter the segment. However, some players are still lobbying for similar tax treatment for PHEVs and REEVs.

The default position is 1 percent GST on EVs and REEVs, while it is 25 percent for PHEVs and HEVs in certain segments. The EV and REEV policy has received a one-year extension, while the lower GST policy for HEVs and PHEVs is over. That takes GST to 25 percent, the same as for comparable ICE vehicles. Some players expect an SRO to bring it down to 18 percent. Let’s see what happens.

The other issue impacting auto assemblers across the board is the start of reverse cascading in the belly of the market. The duty on commercial imports has been reduced to 25 percent on parts, while it ranges from 30 to 50 percent on CBUs. On the flip side, the duty on CKD is 32 percent and 46 percent based on localization, and the weighted average for newer players is 38 to 40 percent.

Local assemblers are expecting another SRO with a decline in duties on CKD.

Thus, a few players are anticipating two changes: lower GST on HEVs and PHEVs, and lower tariffs on CKD. That is why some have halted production in certain segments, mainly HEVs and PHEVs. One Japanese player changed prices on HEVs and started taking orders, while others are waiting.

That is the ground situation. The government is still taking opinions from economists on the policy. One may wonder whether that should have been done earlier. Anyhow, one Lahore-based economist is extremely disgruntled over the subpar analysis done by various ministries over the last one year.

The legwork and deliberation on the auto policy should have been done well in advance, and it should have been presented with, or before, the budget. However, the new fiscal year has started, yet the policy is still under deliberation, and players are still actively lobbying.

Meanwhile, the rumor mill is in full swing. New price forecasts are being circulated based on expected changes in taxes. It seems July will pass in this confusion, and industry production numbers, with an average of 25,000 units per month, are likely to remain low. Some plants are completely closed, while others are partially working. The sooner clarity comes, the better it will be.

The future direction seems to be lower protection for the domestic industry. CBU tariffs are lower. In the coming years, ACDs and RDs are to be abolished, and it would become difficult for some players to survive. Used car imports may increase, and dumping may start taking place.

Things are not looking rosy for numerous new players in the auto industry. As someone aptly put it, autos are the new cement for local seths: everyone wants to join the party, while the juice is limited. Let’s see how long the party lasts.

Pattern of Shareholding

As of June 30, 2025, EMCO has a total of 35 million shares outstanding which are held by 761 shareholders. Local general public has the majority stake of 54.54 percent in the company followed by its leadership, including Directors, the CEO and their family members holding 29.65 percent shares. Associated companies, undertakings and related parties account for 15 percent shares of EMCO. The remaining ownership is distributed among other categories of shareholders…

Historical Performance (2021-25)

EMCO reflected a consistent growth in its topline until 2024 followed by a dip in 2025. Conversely, its bottomline dipped in 2024 and 2025. The company’s margins posted growth in 2021. In 2022, the margins experienced a plunge. Notably, in 2023, EMCO displayed improved gross and operating margins while net margin stayed largely intact at the last year’s level. EMCO’s margins tapered in 2024 and 2025. A comprehensive analysis to understand the underlying reasons for these financial trends is given below.

With strong focus on the improvement of energy infrastructure in the country to overcome slippages in the system and to help counter circular debt, EMCO sales witnessed a robust 30 percent year-on-year rise to clock in at Rs.2077.32 million in 2021. The company produced 4794 tons of insulators in 2021, up 14 percent year-on-year. This translated into capacity utilization of 96 percent in 2021. Unfortunately, export sales couldn’t witness any growth in 2021. Cost of sales grew by 27.21 percent year-on-year in 2021 majorly attributable to high RLNG prices.

However, buoyant sales volume and improved prices resulted in 38.94 percent year-on-year uptick in gross profit with GP margin mounting to 25.40 percent in 2021 from 23.75 percent in the previous year. 10.97 percent higher administrative expense incurred in 2021 was the consequence of workforce expansion from 455 in 2020 to 462 in 2021 which drove the payroll expense up.

Marketing expense ticked up by 4.64 percent year-on-year in 2021 due to higher freight charges as well as intense sales promotion drives executed during the year. Higher provision booked for WWF, WPPF, ECL and obsolescence of stock resulted in a massive 394.46 percent year-on-year spike in other expense. Other income also registered a staggering 515.25 percent rise in 2021 on the back of fair value gain on investment properties. Operating profit picked up by 41 percent year-on-year in 2021 with OP margin jumping up to 17.70 percent from 16.30 percent in 2020.

Monetary easing resulted in 10.12 percent lower finance cost in 2021. This sparked 71.27 percent year-on-year growth in bottomline which clocked in at Rs.201.93 million in 2021 with NP margin of 9.72 percent and EPS of Rs.5.77. This was against the EPS of Rs. 3.37 and NP margin of 7.38 percent registered in 2020.

With 24.50 percent year-on-year ascend in its topline; EMCO continued to thrive in 2022 despite myriad challenges including political and economic turmoil, Pak Rupee depreciation, unprecedented level of inflation and discount rate along with steep hike in energy cost. Net sales were recorded at Rs. 2586.23 million in 2022.

EMCO produced 5288 tons of insulators in 2022 resulting in capacity utilization of 106 percent in 2022. Investment in energy infrastructure remained one of the core concerns for the government resulting in increased demand for EMCO products. Moreover, the addition of new products in the substation equipment portfolio of the company also buttressed the sales.

Cost of sales grew by 27.42 percent year-on-year in 2022 due to elevated prices of RLNG and electricity. The company partly mitigated the cost hike by its timely investment in solar based renewable energy project in 2022. Gross profit grew by 15.90 percent year-on-year in 2022 while GP margin inched down to 23.63 percent.

Administrative expense grew by 17.58 percent year-on-year in 2022 on account of higher payroll expense. Marketing expense registered a hike of 61.71 percent in 2022 which was on account of higher freight and travelling charges due to increasingly high petroleum prices and also because of increased sales volume in 2022.

Furthermore, concentrated advertisement and promotion drives during the year also drove up the marketing expense in 2022. Late delivery charges pushed other expense up by 42.92 percent year-on-year in 2022. This translated into a marginal 3.79 percent year-on-year growth in operating profit in 2022 with OP margin falling down to 14.74 percent in 2022.

Finance cost hiked by 18 percent year-on-year in 2022 due to increased borrowings for capital expenditure as well as considerably high discount rate. Net profit grew by 7.42 percent year-on-year in 2022 to clock in at Rs.216.902 million with NP margin of 8.4 percent and EPS of Rs.6.20.

In 2023, EMCO’s net sales grew by 37 percent year-on-year to clock in at Rs.3545.52 million. During the year, the company enhanced its capacity from 5000 insulators in tons to 6500 insulators in tons.

The enhanced capacity was specifically dedicated for export market. Import restrictions resulted in supply chain disruptions leading to curtailed production and sales volume. Production volume stood at 5032 tons of insulators in 2023, down 4.8 percent year-on-year. This resulted in capacity utilization of 77.42 percent. The topline growth came on the back of upward price revision coupled with robust sales of high voltage switchgear products recently launched by the company.

Effective cost control measures by the company as well as installation of solar based power plant kept the cost in check which grew by 30.69 percent year-on-year in 2023. This resulted in 57.78 percent year-on-year improvement in gross profit with GP margin attaining its optimum level of 27.20 percent in 2023.

Operating expense grew by 29.38 percent year-on-year in 2023 which was due to higher freight charges on account of elevated prices of POL products. Inflationary pressure also drove up payroll expense in 2023 despite plunge in the workforce from 448 employees in 2022 to 429 employees in 2023.

Operating profit grew by 75.22 percent year-on-year in 2023 resulting in OP margin of 18.84 percent – the highest during the period under consideration. 140.10 percent higher finance cost incurred in 2023 was the result of higher discount rate as well as increased borrowings to execute BMR projects.

EMCO’s gearing ratio mounted from 23.81 percent in 2022 to 35.75 percent in 2023. This along with increased taxation charges diluted the bottomline growth to 35 percent year-on-year in 2023. Net profit stood at Rs.292.92 million in 2023 with EPS of Rs.8.37 and NP margin of 8.26 percent.

In 2024, EMCO’s net sales registered 18.25 percent year-on-year growth to clock in at Rs.4192.41 million. This was mainly on the back of price increases as well as encouraging market response on its high voltage switchgear products.

The company has been focusing on diversification of its product lines as well geographical markets to offset low demand in the home market. There was 34.40 percent decline in EMCO’s production volume during the year which clocked in at 3300 tons of insulators. This resulted in capacity utilization of 50.77 percent in 2024.

Lower capacity utilization was due to the installation of new machinery and equipment which impeded the routine operations of the company. However, this was in line with the company’s long-term vision in order to cater to the growing demand of switchgear products.

Lower production was also the result of cash-flow constraints as the company was struggling to sell off its finished goods inventory and realign its sales mix in favor of high-margin switchgear products.

Heightened cost pressure slightly reduced the GP margin to 26.80 percent in 2024 despite gross profit portraying 16.52 percent year-on-year rise in absolute terms. Operating expense mounted by 34.71 percent in 2024 due to higher freight charges on account of growing export sales, spike in fuel prices, implementation of axle load regulation and one-time fee charges by SECP for increase in authorized capital.

Operating profit picked up by 12.31 percent in 2024 with OP margin ticking down to 17.89 percent. Finance cost escalated by 58.36 percent in 2024 due to higher discount rate as well as increased long-term borrowings to finance BMR projects and increased short-term borrowings to meet working capital requirements.

EMCO recorded net profit of Rs.218.998 million in 2024, down 25.24 percent year-on-year. This translated into EPS of Rs.6.26 and NP margin of 5.22 percent – the lowest since 2019.

EMCO recorded 13.96 percent decline in its net sales which clocked in at Rs.3607.04 million in 2025. This was due to reduced demand of insulators from DISCOs and NTDC on account of tighter fiscal spending. This resulted in 21.82 percent plunge in local sales which clocked in at Rs. 3712.625 million in 2025. To make up for the reduced demand, the company increased its focus on the export market particularly the US.

Trade clashes between the US and China created great opportunity for EMCO to penetrate in the US market. Export sales strengthened by 174 percent to clock in at Rs.462.798 million.

Production volume slid by 2.30 percent to clock in at 3224 insulator in tons in 2025. This resulted in the capacity utilization of 49.60 percent in 2025. Lower capacity utilization was due to the change of the company’s focus on new product lines such as Switchgear and Apparatus Insulators for High Voltage Substation applications and new products for the export market.

Cost of sales dipped by only 2.68 percent in 2025 due to lower absorption of fixed cost and high finished goods inventory at the end of the year. Gross profit deteriorated by 44.78 percent in 2025 with GP margin falling down to 17.20 percent – the lowest level recorded since 2019. Administrative expense ticked up by 8.93 percent in 2025 due to higher payroll expense on account of inflationary pressure. This was despite the fact that the company streamlined its workforce from 463 employees in 2024 to 425 employees in 2025.

Distribution expense tumbled by 13 percent in 2025 due to considerably lower advertising & promotion budget allocated for the year as well as curtailed travelling expense. EMCO recorded 79.29 percent drop in its other expense in 2025 due to considerably lesser provisioning done for WWF, WPPF and ECL.

Moreover, no exchange loss and balances written off were recorded in 2025.

Late delivery charges due to supply chain disruptions were also controlled in 2025. Other expense was completely offset by 65.65 percent higher other income recorded in 2025. This was predominantly the result of fair value gain on investment properties followed by export rebate, exchange gain and rental income. EMCO’s operating profit dwindled by 51 percent in 2025 with OP margin shrinking to 10.19 percent. Finance cost tapered off by 17.12 percent in 2025 due to monetary easing.

EMCO recorded 74.55 percent thinner net profit to the tune of Rs.55.74 million in 2025. This translated into EPS of Rs.1.59 and NP margin of 1.55 percent.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, EMCO recorded 28.36 percent growth in its topline which clocked in at Rs.3758.037 million. The government’s restructuring and re-profiling of the power sector resulted in improved liquidity of DISCOs and NTDC which propelled the demand of insulators during the period under review. Besides, the government’s focus on infrastructure projects also buttressed the demand of ECMO’s products in 9MFY26.

The company produced 2890 tons of porcelain insulators in 9MFY26, up 28 percent year-on-year. The company also focused on enhancing its global presence as evident in 53 percent increase in export sales which clocked in at Rs.527 million in 9MFY26.

Penetration strategy in the global market didn’t allow the company to raise its price which resulted in GP margin of 17.25 percent in 9MFY26 versus GP margin of 18.85 percent recorded in 9MFY25.

Administrative expense ticked up by 6 percent in 9MFY26 due to inflationary pressure. Distribution expense surged by a massive 43.37 percent in 9MFY26 due to cost of expansion in the diverse geographical markets.

Greater provisioning done for WWF and WPPF appears to be the cause of 130.66 percent spike in other expense in 9MFY26. Other income deteriorated by 33.57 percent in 9MFY26 likely due to monetary easing.

EMCO recorded 5.19 percent downtick in its operating profit in 9MFY26 with OP margin clocking in at 7.70 percent versus 10.43 percent in 9MFY25. Monetary easing also squeezed finance cost by 24.77 percent in 9MFY26 despite greater outstanding borrowings.

Net profit clocked in at Rs.64.49 million in 9MFY26, up 140.86 percent year-on-year. This translated into EPS of Rs.1.84 and NP margin of 1.72 percent in 9MFY26 versus EPS of Rs.0.77 and NP margin of 0.91 percent recorded in 9MFY25.

Future Outlook

With encouraging sales of high-value switchgear products and increased focus towards export sales, EMCO’s topline is expected to pick up. Margin pressure may persist because of competitive pressure in the export market; however, the company is undertaking measures to contain its cost for e.g. installation of solar based power plant and localization of raw materials.

Panel imports have gone from deceleration to outright contraction. Between January and May 2026, Pakistan brought in 4,574MW of solar panels, against 11,781MW in the same five months of 2025, a drop of 61 percent. The dollar value fell almost as sharply, down 54 percent to $514 million from $1.12 billion.

None of this means the market is shrinking. Cumulative panel imports crossed 55,700MW by the end of May, still adding volume every month; the slowdown is in the rate of addition, not the base itself.

Four years ago, Pakistan was importing panels at under $0.30 per watt. It is now paying roughly a third of that. Module prices have fallen more than 70 percent since 2017, from $0.38/W to about $0.10-0.12/W through 2026.

Panels, in other words, have finished becoming a commodity. The room for a repeat of 2023-24’s import frenzy, when a single fiscal year briefly bought over 14,000MW, has narrowed on price grounds alone. There are only so much further module costs that can fall before manufacturers stop shipping.

On the surface, a slower panel market reads as demand exhaustion: early adopters saturated, urban rooftops full, the low-hanging fruit picked. Look one line item down the import bill, and a different picture appears.

Lithium-ion battery imports have gone from a rounding error to a genuine trend. Battery imports rose from $42 million in FY23 to $280 million in FY26.Battery imports in 4QFY26 alone account for 50 percent of the fiscal year imports – suggesting the ground is warming up.

That inflection is the actual story. Pakistan’s solar market spent its first phase chasing capacity: getting panels onto as many roofs as possible, as cheaply as possible, to escape grid tariffs that kept climbing through 2023 and 2024. That phase is now mathematically slowing because most of the addressable, easy-to-convert demand has already been converted. What is left is a market that increasingly wants to store what it generates rather than simply generate it, a shift from displacing the grid during the day to leaving it altogether, or close to it.

There is corroborating evidence in the gap between panels imported and panels actually registered under net metering. By the close of FY25, cumulative panel imports stood at roughly 47,200MW. Officially net-metered installed capacity, as reported by distribution companies, was just 6,485MW, meaning at least 86 percent of everything imported never showed up as a formal, grid-tied net-metering connection.

Some of that gap is inventory sitting in warehouses; some is installation lag; but a meaningful share comprises systems that were never intended to touch the grid at all: commercial and industrial self-consumption setups, hybrid inverters paired with batteries, and off-grid installations in areas where net metering does not reach. The battery imports numbers suggest that share is growing, not shrinking.

None of this is guesswork dressed up as inevitability. It is one dataset decelerating exactly as a second, previously immaterial dataset, starts compounding, the kind of handoff that, in most commodity cycles, marks a market maturing rather than dying.

Pakistan’s solar story spent 2021 through 2024 being about access. What the fresher numbers now show is a market moving into a second, quieter phase: not who can plug in a panel, but who can afford to store what it produces. The panel boom bought Pakistan cheap daytime power. The battery numbers, still small in absolute dollar terms but unmistakable in their trajectory, suggest the next fight is over what happens after the sun goes down.

The company is engaged in leather tanning, manufacturing of leather garments as well as export of leather and leather garments.

Pattern of Shareholding

As of June 30, 2025, PAKL has a total of 3.4 million shares outstanding which are held by 599 shareholders. Sponsors’ associates & friends have the majority stake of 43.08 percent in the company followed by directors, their spouse and minor children holding 36.18 percent shares of PAKL.

Other individuals account for 18.14 percent shares of the company while financial institutions and joint stock companies collectively hold 2.55 percent shares.

The remaining 0.05 percent shares are held by Investment Corporation of Pakistan.

Historical Performance (2021-25)

PAKL’s topline posted a slump in 2021. It then recovered in the subsequent year followed by a descent thereafter.

The company posted net loss in 2021, 2022 and 2023. In all the years under consideration, PAKL posted negative equity because of hefty accumulated losses. This was due to the fact that the company has consistently been registering net losses since 2014. PAKL’s liabilities are quite higher than its total assets. Exorbitant level of current liabilities also translates into negative working capital in all the years under consideration.

In 2021 witnessed a freefall of margins with operating and net margins striking the negative zone. In the subsequent two years, gross margin improved while operating and net margins continued to stay in the negative territory. In 2024 and 2025, PAKL’s margins posted phenomenal growth The detailed performance review of the period under consideration is given below.

As against the tremendous year-on-year topline growth of 182.88 percent registered in 2020 on the back of tremendous export orders, PAKL recorded 49.98 percent decline in net sales which clocked in at Rs.108.36 million in 2021. While local sales showed some improvement during the year, the drastic fall of around 61 percent in export sales squeezed the topline in 2021. Thinner export sales were the result of lockdown imposed in various export destinations of PAKL.

Cost of sales plunged by 46.51 percent year-on-year in 2021. Gross profit slipped by 82.11 percent year-on-year in 2021 with GP margin marching down to 3.48 percent.

Operating expense also nosedived by 79.55 percent year-on-year in 2021 as the company didn’t book any provisioning against doubtful debts and also because of lower freight charges because of lower export sales. Other income slumped by 94.35 percent year-on-year in 2021 due to high-base effect as the company got waivers on loan and mark-up in 2020.

PAKL recorded operating loss of Rs.6.43 million in 2021. Bank charges tumbled by 55.89 percent year-on-year in 2021. As a consequence, PAKL posted net loss of Rs.8.70 million in 2021 with loss per share of Rs.2.56. This was against the EPS of Rs.14.35 and NP margin of 22.52 percent recorded in 2020.

PAKL’s topline registered 22.68 percent year-on-year improvement to clock in at Rs.132.94 million in 2022. This was due to rise in both export and local sales during the year. Pak Rupee depreciation proved to be a blessing in disguise for the company and drove its gross profit up by 255.25 percent in 2022.

GP margin also rose to 10.10 percent in 2022. Operating expense stood at almost the same level as of previous year as the company reduced its workforce to 40 employees and also because of lower freight charges. Other income nosedived by 58.80 percent year-on-year in 2022 due to lower balances written back during the year.

PAKL’s operating loss slipped by 89.54 percent to clock in at Rs.0.67 million in 2022. Bank charges also narrowed down by 57.16 percent year-on-year in 2022, translating into 66.68 percent lower net loss to the tune of Rs.2.90 million incurred during the year. Loss per share was recorded at Rs.0.85 in 2022.

In 2023, PAKL’s topline sustained 31.78 percent erosion to clock in at Rs.90.69 million. This was the result of a plunge in both local and export sales during the year. The company couldn’t maintain its growth momentum due to exorbitant increase in the prices of materials which dejected the customers both locally and globally.

Wet blue and chemical prices hiked by 25 percent and 50 percent respectively. Electricity prices also spiked during the year. Moreover, only 50 percent of the company’s gas requirement was met by the gas pipeline.

The thin liquidity of the company and its inability to meet its financial obligations didn’t allow it to obtain more loans from external parties. Hence, it couldn’t afford to switch to LPG and purchase costlier raw materials to continue its operations.

Due to lower sales volume, cost of sales also slid by 32.16 percent in 2023. Gross profit shrank by 28.40 percent year-on-year in 2023, however, GP margin slightly improved to clock in at 10.58 percent.

Operating expense surged by 13.89 percent year-on-year in 2023 which was the consequence of higher freight charges on account of escalated prices of POL products. Legal & professional charges also spiked during the year. Operating loss magnified by 1294.79 percent in 2023 to clock in at Rs.9.37 million.

Bank charges grew by 28.20 percent year-on-year in 2023 resulting in 286.45 percent higher net loss to the tune of Rs. 11.21 million incurred during the year. Loss per share was recorded at Rs.3.30 – the highest among all the years under consideration.

In 2024, PAKL recorded year-on-year topline slide of 1.43 percent. Net sales clocked in at Rs.89.40 million. This was on account of a decline in export sales due to global recession.

Thinner export sales were partially substituted by an uptick in local revenue from leather processing. Cost of sales plummeted by 5.74 percent in 2024 due to lesser raw materials consumed owing to lower export volumes. This resulted in 34.95 percent progress in the company’s gross profit in 2024.

GP margin also jumped up to 14.50 percent in 2024. Operating expense tumbled by 24.53 percent in 2024 predominantly because of lower freight & forwarding charges as well as travelling & conveyance charges incurred during the year. What gave a significant support to the company’s bottomline was a staggering 11457 percent growth in other income. This was on account of waiver of loan liability and mark-up on loan on settlement.

PAKL recorded operating profit of Rs.11.73 million in 2024 with OP margin of 13.12 percent. This was against the operating loss of Rs.9.37 million recorded in 2023.

Bank charges & commission slipped by 5.58 percent in 2024 owing to lesser bank transactions on account of weak export sales volume. After three years of posting net losses, PAKL was able to record net profit of Rs.8.126 million in 2024 with EPS of Rs.2.39 and NP margin of 9.1 percent.

In 2025, PAKL’s topline further deteriorated by 32.78 percent to clock in at Rs.60.09 million. Leather processing income in the home market posted a drastic decline of 77.06 percent to clock in at Rs.8.689 million in 2025. This was due to decline in the demand of leather products in Pakistan due to sustained period of high inflation which took its toll on the purchasing power of consumers.

Global recession also wreaked havoc on the export sales of the company which nosedived by 7.60 percent to clock in at Rs.51.78 million in 2025. Cost of sales plunged by 39.65 percent in 2025 in line with streamlined operations due to lower demand.

PAKL’s ability to have a greater proportion of export sales in its sales mix resulted in 7.77 percent uptick in its gross profit in 2025. GP margin attained its optimum level of 23.23 percent in 2025.

Considerably lower freight charges due to thinner sales volume, no travelling charges and a massive drop in legal & professional charges and fee & subscription charges resulted in 7.84 percent downtick recorded in operating expense in 2025.

Other income also dwindled by 29 percent in 2025 due to high-base effect as the company received waiver of loan liability and mark-up in the previous year. Operating profit diminished by 14.43 percent in 2025, however, OP margin jumped up to 16.70 percent. Bank charges & commission ticked up by 8.28 percent in 2025.

PAK L didn’t pay any mark-up on its loan due to unwinding of related deferred income during the year. Tax adjustment of Rs.1.400 million for prior years resulted in 94.30 percent decline in tax expense for the year. This resulted in net profit of Rs.9.023 million in 2025. NP margin was recorded at 15 percent in 2025 while EPS stood at Rs.2.65.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, PAKL posted year-on-year decline of 84.80 percent in its topline which clocked in at Rs.6.55 million. The revenue recognized during the period comprised of export revenue from sale of leather as well as rebate. No local sale (leather processing revenue) was recorded during the period as the contract for third-party leather processing was not restored.

The production for export sales was also conducted on toll manufacturing basis instead of self manufacturing. Due to low capacity utilization, fixed cost couldn’t be absorbed efficiently resulting in gross loss of Rs.2.496 million in 9MFY26 versus gross profit of Rs.8.99 million recognized during the period.

Operating expense ticked up by 4.56 percent in 9MFY26. While selling & distribution expense was low due to petite sales volume, higher operating expense was the consequence of increased payroll expense, power & water charges as well as depreciation expense incurred during the period.

The company recorded rental income of Rs.1 million during the period versus no rental income recognized in 9MFY25. PAKL recorded operating loss of Rs.10.87 million in 9MFY26 versus operating loss of Rs.0.53 million registered in 9MFY25. Finance cost dipped by 81.90 percent in 9MFY26 due to lesser bank charges & commission.

The effect of deferred taxation helped PAKL record net profit of Rs.0.814 million in 9MFY25. However, in 9MFY26, the company posted net loss of Rs.10.949 million. This translated into loss per share of Rs.3.22 in 9MFY26 versus EPS of Rs.0.05 recorded in 9MFY25.

Future Outlook

As of March 30, 2026, PAKL has negative equity of Rs. 330.304 million. Its current liabilities exceed its current assets by Rs.332.511 million. These conditions cast significant doubts on the ability of the company to continue as a going concern. The company has recently sold off its old machinery and rented out its office building to improve its liquidity conditions.

Besides internal concerns, the company is also facing demand destruction owing to shrunken pockets of local customers and the company’s inability to compete in the global market due to high cost of production particularly elevated energy cost in the home market.

The company has recently shifted to toll manufacturing to reduce its cost and stay competitive in the export market. In the recent period discussed, the company solely relied on its exports sales, however, in the wake of the ongoing geo-political tensions including the war imposed on the Gaza strip and other Middle Eastern regions, the sustainability of the company’s exports can’t be guaranteed.

On the positive front, PAKL has been rewarded a certificate of “Gold rated Commissioning Manufacturer” by Leather Working Group Assurance Services, UK. This may help the company to attain export orders in new geographical markets.

The country’s IDI score rose from 56.4 in 2025 to 67.7 in 2026, a 20 percent year-on-year increase. And since 2023, the score has moved from 48.7 to 67.7. That is a meaningful gain.

But Pakistan still remains slightly below the lower-middle-income average of 68.9, well below the Asia-Pacific average and behind the global average.

The International Telecommunication Union does not publish rankings in the index. It reports scores to assess progress towards universal and meaningful connectivity. On that measure, Pakistan’s movement is positive. Yet the detail behind the score shows that the country’s digital challenge is not just about networks. It is about adoption, ownership, and usage.

The split between the two pillars: universal and meaningful connectivity, tells the real story. Pakistan scores 78.5 on meaningful connectivity, but only 56.8 on universal connectivity. This means that those who are connected appear to be using digital services more meaningfully, but too many people are still outside the connected economy. This is the key lacuna in the country’s digital story.

Data is relatively cheap. Usage among connected consumers is rising. But access has not become universal.

The country’s clearest strength is,however, affordability. The mobile data and voice basket is priced at 1.4 percent of GNI per capita. That is not yet below the ITU’s 1 percent affordability goalpost, but it is still much cheaper than the lower-middle-income average and even the Asia-Pacific average. This reflects one of Pakistan’s durable digital advantages: a highly price-competitive mobile market.

But affordability alone is not enough to close the digital divide. And it is actually a paradox. If mobile connectivity is relatively cheap, why are active mobile-broadband subscriptions only 55 per 100 people? This is a weak point for the country. It suggests that price is not the only barrier.

The index highlights that handset affordability, low device ownership, digital literacy, weak relevance of online content and gender gaps in access are all likely holding back adoption.

Device ownership is a particularly serious constraint. Only 49.8 percent of individuals are shown as owning a mobile phone. Cheap data does not help people who do not have a suitable device. This matters for e-commerce, financial inclusion, online education, digital public services, and the broader ambition of building an export-oriented technology economy.

Coverage is another red flag. Pakistan’s 3G and 4G population coverage are both listed at 81 percent. That means roughly one-fifth of the population is still outside reported mobile broadband coverage. This gap is likely concentrated in rural, and remote areas, which is not small for a country like Pakistan.

There is also a measurement caveat. The ICT Development Index itself does not capture everything that matters. It does not include fixed-broadband penetration, internet speed, digital skills, online safety, or cybersecurity. The report also warns that country-level averages can hide large disparities across regions and demographic groups.

So, Pakistan’s real digital divide may be even wider than the headline score suggests.

The policy takeaway is straightforward. Pakistan has made progress, and affordability is a real advantage. Data is cheap and local phone assembly has grown, but adoption is held back by coverage gaps, handset affordability, weak digital literacy, gendered access, and too few everyday digital use cases.

The company is engaged in the manufacturing and sale of Polyester staple fibre (PSF) and yarn. Ibrahim Holdings (Private) Limited is the parent company of IBFL.

Pattern of Shareholding

As of December 31, 2025, IBFL has a total outstanding share volume of 310.507 million shares outstanding which are held by 2031 shareholders. Ibrahim Holdings (Private) Limited, the parent company of IBFL, holds 91.81 percent of its shares followed by local general public having a stake of 4.29 percent in the company.

Foreign companies account for 3.80 percent shares of IBFL. The remaining shares are held by other categories of shareholders.

Performance Trajectory (2021-25)

Except for a nosedive in 2025, IBFL’s topline followed an inclining trend over the period under consideration. Conversely, its bottomline posted net loss in 2020. In 2021, IBFL’s bottomline registered staggering rise only to recede in the following two years. In 2024, IBFL’s bottomline posted a phenomenal growth followed by a slump in 2025.

The margins also followed the similar pattern as the bottomline. The detailed performance review of the period under consideration is given below.

IBFL’s topline which dipped by 28.93 in 2020, recovered and posted 49.98 percent rise in its net sales which clocked in at Rs. 70,607.07 million in 2021. This was the result of 27 percent growth in the sales volume of PSF which clocked in at 267,037 MT and 125 percent growth in the sales volume of yarn which clocked in at 70,607 MT in 2021.

High crude oil prices pushed the PSF prices up, resulting in improved margins. Although high raw material prices tried to dilute the gross profit, however, with robust sales volume and upward price revisions, IBFL was able to multiply its gross profit by 538.81 percent in 2021, with GP margin reaching its optimum level of 17.65 percent versus GP margin of 4.1 percent recorded in 2020. Distribution and administrative expense grew by 12.94 percent and 41 percent respectively.

High freight and forwarding and elevated payroll expense were the main culprits behind elevated operating expense in 2021. Other expense multiplied by 2112.78 percent in 2021 due to higher provisioning booked for WWF and WPPF.

Other income also grew by 173.75 percent during 2021 on account of higher scrap sales and gain on disposal of property, plant and equipment during the year.

Operating profit grew by 1189.84 percent in 2021 with OP margin jumping up to 14.75 percent from 1.71 percent in 2020. Finance cost slid by 42.19 percent year-on-year in 2021 which was the result of low discount rate and significantly lower borrowings as the company was able to improve its liquidity to a great extent in 2021.

IBFL was able to post net profit of Rs.6,578.95 million in 2021 with NP margin of 9.32 percent and EPS of Rs.21.19. This was against the net loss of Rs. Rs.1295.48 million and loss per share of Rs.4.17 recorded in 2020.

(In 2022, IBFL, in compliance with the regulations of SECP, changed its financial year from July-June to January-December.

Comparing the year-ended June 30, 2021 to year-ended December 31, 2022 is paradoxical as the period of Jan-Jun, 2022 is included in the annual reports of both 2021 and 2022. To ignore this overlapping, the analysis of 2022 is presented on an irrelative basis)

In 2022, IBFL’s topline was recorded at Rs.115,581 million. During the year, the company sold 285,540 MT of PSF and 53,511 MT of yarn. The year proved to be a challenging one due to deteriorating macroeconomic and political scenario and devastating floods in the country.

Commodity super cycle in the global market owing to Russia-Ukraine crisis coupled with steep deprecation of Pak Rupee and high indigenous inflation pushed up cost of sales and resulted in GP margin of 11.68 percent in 2022.

Higher freight and forwarding charges due to surging fuel cost and increased sales volume played an important role in suppressing the operating profit during the year.

Administrative expense also spiked on the back of higher payroll expense on account of inflation. The OP margin turned out to be 9.16 percent in 2022. Higher finance cost on account of excessive monetary tightening and elevated borrowings culminated into net profit of Rs.5310,545 million in 2022 with NP margin of 4.6 percent and EPS of Rs.17.10.

In 2023, IBFL’s net sales posted a paltry 3.62 percent year-on-year rise to clock in at Rs.119,761.93 million. PSF sales dropped by 20 percent year-on-year in 2023 to clock in at 228,940 MT in 2023 and yarn sales posted 4 percent year-on-year uptick to clock in at 55,813 MT.

While high inflation had already squeezed the demand in the local market, incentives given by the GoP to the PSF importers further harmed the local PSF manufacturers.

High raw material and conversion cost due to elevated prices of raw materials, Pak Rupee depreciation and high energy tariff resulted in 33.58 percent lower gross profit recorded by IBFL in 2023. GP margin fell to 7.49 percent in 2023. Selling & distribution expense registered 26.9 percent year-on-year surge in 2023 due to high freight & forwarding charges.

Administrative expense multiplied by 12.81 percent in 2023 primarily on account of higher payroll expense on account of inflation. IBFL streamlined its workforce from 3490 employees in 2022 to 3203 employees in 2023. Considerably lower provisioning for WWF and WPPF resulted in 60 percent lower other expense incurred by the company in 2023.

Other income also slid by 76 percent in 2023 because of high-base effect as the company recorded dividend income, gain on sale of fixed assets and gain on redemption of short-term investments in the previous year.

Operating profit declined by 44.98 percent in 2023 with OP margin of 4.86 percent. Finance cost escalated by 215.42 percent in 2023 due to high discount rate and increased borrowings. Net profit dwindled by 94.28 percent to clock in at Rs.303.53 million in 2023 with EPS of Rs.0.98 and NP margin of 0.25 percent.

In 2024, IBFL posted an uptick of 0.76 percent in its topline which was recorded at Rs.120,667.93 million. Sales volume of PSF dipped by 6 percent to clock in at 214,334 M tons while sales volume of yarn nosedived by 2 percent to clock in at 54,898 M tons in 2024.

Export sales also eroded by 92.27 percent to clock in at Rs.31.66 million in 2024. This was due to regional conflicts and the ongoing recession in the major export destinations of the company. While local sales volume also dipped, an uptick in the prices resulted in topline growth.

Cost optimization measures such as plant modernization and diversification of energy sources resulted in 8.65 percent year-on-year improvement in gross profit in 2024 with GP margin inching up to 8 percent. Inflationary pressure resulted in 6.53 percent and 13 percent spike in distribution expense and administrative expense respectively in 2024.

The main culprits were higher salaries & wages, directors’ remuneration, travelling & conveyance as well as repair & maintenance charges incurred during the year. Other expense mounted by 156.16 percent in 2024 mainly on account of balances written off during the year.

Other income diminished by 56.71 percent in 2024 due to lower scrap sales, no balances written back and no exchange gain recognized during the year. Operating profit ticked down by 1 percent in 2024, however, OP margin largely remained intact at 4.8 percent.

Finance cost plummeted by 13.34 percent in 2024 due to monetary easing as well as lower outstanding borrowings. After accounting for deferred tax, provision for taxation contracted by 49.66 percent in 2024. This translated into 677.62 percent year-on-year growth in bottomline which clocked in at Rs.2360,116 million in 2024. This translated into EPS of Rs.7.60 and NP margin of 1.96 percent.

IBFL recorded 13.43 percent year-on-year decline in its net sales which clocked in at Rs.104,457.36 million in 2025. While the sales volume of PSF posted 7 percent uptick during the year, yarn sales dropped by 32 percent. The PSF plant achieved capacity utilization of 65 percent in 2025 by producing 253,435 tons of PSF, up 1.93 percent year-on-year.

Conversely, the textile division recorded capacity utilization of 57 percent in 2025 which translated into production volume of 38,099 tons of different blended yarns, down 33.95 percent year-on-year.

Low capacity utilization of both polyester and textile division was the consequence of dumping of cheaper imported products in the local market.

IBFL’s export sales also nosedived by 44 percent to clock in at Rs.17.706 million in 2025 due to tariff wars among major economies which kept changing the dynamics of the global textile market.

Cost of sales slid by 13 percent in 2025 resulting in 17.52 percent thinner gross profit in 2025. GP margin also fell to 7.69 percent in 2025. Lesser freight & forwarding charges translated into 6.34 percent dip in distribution expense in 2025.

Conversely, administrative expense ticked up by 3 percent in 2025 due to higher payroll expense on account of inflationary pressure. This was despite the fact that IBFL rationalized its workforce from 3117 employees in 2024 to 3107 employees in 2025.

Lesser provisioning done for WWF and WPPF translated into 9.97 percent plunge in other expense in 2025. Other income grew by 33.73 percent in 2025; however, proportionally it was much smaller than other expense. Improved other income was the result of greater scrap sales, exchange gain and gain on disposal of fixed assets which offset the impact of lower profit on bank deposits due to monetary easing.

Operating profit diminished by 28.62 percent with OP margin sliding down to 3.94 percent. Despite increased short-term and long-term borrowings, finance cost plummeted by 29.75 percent in 2025 due to monetary easing.

Gearing ratio clocked in at 26 percent in 2025 versus 19 percent in the previous year. Net profit tapered off by 60.47 percent to clock in at Rs.932.915 million in 2025. This translated into EPS of Rs.3.00 and NP margin of 0.89 percent in 2025.

Recent Performance (1QCY26)

During the first quarter of CY26, IBFL recorded a marginal 4.20 percent year-on-year uptick in its net sales which clocked in at Rs.28,886.71 million. The company recorded production volume of 65,719 tons in 1QCY26, up 3.28 percent year-on-year. This translated into capacity utilization of 67 percent in 1QCY26.

The dumping of cheaper products in the local market didn’t allow the company to pass on the impact of cost hike to its customers. This coupled with increased oil prices due to Middle East crisis and elevated energy tariff in the local market resulted in 57 percent thinner gross profit in 1QCY26 with GP margin clocking in at 4.60 percent versus GP margin of 11.15 percent recorded in 1QCY25. Thinner export sales due to geopolitical tension resulted in 5.11 percent dip in distribution expense in 1QCY26.

Conversely, administrative expense surged by 5.10 percent in 1QCY26 due to inflationary pressure. Lower profit related provisioning appears to be the cause of 97.34 percent decline in other expense in 1QCY26.

Other income also deteriorated by 59.74 percent in 1QCY256 probably due to lower income from bank deposits due to monetary easing. Operating profit dwindled by 71.67 percent in 1QCY26 with OP margin clocking in at 1.72 percent versus OP margin of 6.33 percent recorded in 1QCY25. Finance cost surged by 54.52 percent in 1QCY26.

IBFL posted net loss of Rs.320.19 million in 1QCY26 versus net profit of Rs.1076.26 million recorded in 1QCY25. Loss per share was recorded at Rs.1.03 in 1QCY26 versus EPS of Rs.3.47 posted in 1QCY25.

Future Outlook

Cut-throat competition from imported yarn and PSF may impede the local manufacturers from grabbing a significant portion of market share in the absence of efficient inventory management, cost rationalization and concerted marketing efforts.

The company is undertaking various BMR projects to increase its operational efficiency. These include deploying latest technology for its PSF Plant II in partnership with T.EN Zimmer, Germany.

The company has already completed installation of another yarn manufacturing plant which commenced its commercial operations in the last quarter of 2025. The company has also been increasing its solar power capacity over the years and it now has the total solar capacity of 3.54 megawatts.

On the flipside, the global economic outlook looks gloomy on the back of ongoing tensions in the Middle East which has taken its toll over commodity markets – crude oil to be specific. This will put a major dent on the cost structure of manufacturing sector.

Copyright Business Recorder, 2026

FBR collected Rs13 trillion in the last fiscal year, which is more than Rs500 billion lower than the IMF’s latest projection and almost a trillion short of the previous target. As a share of GDP, it stood at 10.2 percent, slightly lower than last year. The increase in dollar terms is also optically high, as the base in FY23 was low due to sharp currency depreciation. Now it appears higher, while many economists believe the currency is overvalued. That could drag the dollar comparison down once the currency adjusts.

Many businesspersons say that FBR pushed, as usual, for higher advance tax payments in June to come closer to the target. The bigger challenge now is to achieve 17 percent plus growth in FY27 to reach Rs15.3 trillion. The target becomes even stiffer given some reduction in tax rates here and there, while no major new taxes have been imposed and rates have not been increased.

The consequence will be even higher pressure on the existing base. The economy is not gaining momentum and the natural increase in tax collection will be limited. FBR may push harder on recoveries, and that is already becoming visible. Businesses are scared. The revenue strategy to meet the target is missing.

Then there is the continuing dichotomy in tax rates across different types of income. Some incomes are taxed at 1 percent or even lower, while in some cases the rate goes beyond 40 percent. The authorities are offering all kinds of concessions for dollar inflows, whether from IT, freelance income, or remittances. In the effort to chase dollars, the domestic economy continues to suffocate.

There is a limit to how much the domestic formal sector can take. Even after the marginal reduction, large formal sector companies are effectively paying more than 50 percent of their income in taxes. Capital formation remains disincentivized. The minimum tax is making life difficult for certain businesses, especially textiles, and that will hinder growth in goods exports.

There is no effective drive to enhance documentation. The fiscal targets are to be met partly through around Rs1 trillion in grants from provinces. This will push provinces to generate more revenues, and their pressure on sales tax on services is already being felt by some businesses.

Businesses are feeling stressed. They not only have to give up a higher chunk of income in taxes but also have to spend more time dealing with tax matters, which hurts productivity. Overall sentiment is negative, and undue stress continues to keep investment at bay.

Things are unlikely to improve in this fiscal year, as FBR’s target is expected to become a binary IMF condition by December 2026. The pressure is likely to be even higher this year. The government needs to rethink its strategy, as much needed investment is likely to remain low, while savings continue to be absorbed by the government, where spending remains inefficient.

The principal activity of the company is the manufacturing and sales of galvanized steel pipes, API line pipes, precision steel tubes as well as polymer pipes and fittings. Besides serving the local market, INIL has a footprint in around 60 countries across the globe.

Pattern of Shareholding

As of June 30, 2025, INIL has a total of 131.882 million shares outstanding which are held by 4499 shareholders. Directors, CEO, Sponsors and their family members have the majority stake of 42.989 percent in the company followed by Government financial institutions, NIT and NBP related companies holding 23.67 percent shares of INIL.

Local general public accounts for 20.70 percent shares of INIL while Modarabas & Mutual funds own 3.74 percent shares.

Public, private and other companies hold 3.55 percent shares of INIL followed by Banks, DFIs and NBFIs by holding 2.45 percent shares. Around 1.45 percent of the company’s shares are held by insurance companies and 1.13 percent by associated companies. The remaining shares are held by other categories of shareholders.

Financial Performance Trail (2021-25)

The topline and bottomline of INIL fluctuated over the period under consideration. The topline rode an upward trajectory in 2021 and 2022 followed by a sharp decline in 2023. In 2024, INIL’s net sales picked up and then plunged in 2025.

Conversely, the bottomline posted growth only in 2021 and 2023. The company registered net loss in 2020. INIL’s margins dropped in 2020 followed by a rebound in margins in 2021. In 2022, gross and net margins eroded while operating margin progressed. In 2023, all the margins considerably recovered with operating and net margins boasting their optimum values.

In 2024, gross margin ticked up while operating and net margins dwindled. This was followed by a descent in all the margins in 2025. The detailed performance review of the period under consideration is given below.

In 2021, INIL posted a staggering 52.60 percent year-on-year growth in topline which clocked in at Rs. 28,940.10 million. This came on the back of volumetric growth of 25 percent and 71 percent in local and export sales respectively. During the year, local LSM improved by 8.99 percent with local steel and iron sectors rebounding by 1.66 percent.

Cost of sales also magnified by 41.91 percent in 2021 due to record high prices of steel. Yet higher sales volume and improved prices of INIL’s products resulted in 189.76 percent year-on-year growth in gross profit.

GP margin boasted a strong rebound and climbed up to 13.73 percent in 2021 from 7.23 percent in 2020. 83.78 percent higher distribution expense was the consequence of higher inflation as well as rise in ocean freight charges due to superior export sales.

Administrative expense also surged by 28.26 percent in 2021 due to increased payroll expense on account of inflationary pressure. Higher provisioning done for WWF and WPPF as well as generous donations drove up other expense by 514.129 percent in 2021.

Exchange gain slightly shrank due to appreciation in the value of Pak Rupee in 2021; however, high dividend and rental income from subsidiary company saved the day for INIL as its other income flew up by 81.70 percent year-on-year in 2021.

The company also reversed the loss allowance of Rs.52.57 million on trade debts in 2021 booked in the previous years. Operating profit multiplied by a stunning 272.85 percent in 2021 which translated into OP margin of 10.42 percent versus OP margin of 4.26 percent recorded in 2020. Finance cost plunged by 38.97 percent in 2021 as discount rate was reduced during the year.

INIL posted net profit of Rs.2314.56 million in 2021 with NP margin of 8 percent and EPS of Rs.17.55. This was against the net loss of Rs.694.20 million and loss per share of Rs.5.26 recorded in 2020.

In 2022, the topline posted a robust year-on-year growth of 30.82 percent to clock in at Rs.37,857.86 million. Locally, the off-take slid by 10 percent year-on-year due to uncertain economic and political environment as well as misuse of tax exemptions by FATA/PATA region players.

Conversely, export volume grew by 9 percent year-on-year in 2022 on the back of improved access to the European region which counterbalanced low sales in Afghanistan and Sri lanka on account of political turbulence in those territories.

Historic high prices of steel coupled with depreciated Pak Rupee resulted in 32.93 percent year-on-year rise in the cost of sales.

Gross profit grew by 17.49 percent in 2022 but GP margin slipped to 12.33 percent.

The company undertook rigorous cost control measures and pushed down its administrative expense by 9.77 percent in 2022, however, selling and distribution expense grew by 73.17 percent year-on-year due to higher exports sales volumes which pushed up the freight charges.

Other income posted a handsome growth of 209.26 percent in 2022 on account of dividend income from subsidiary company and robust exchange gain due to Pak Rupee depreciation.

Other expense moved down by 34 percent in 2022 due to lower profit related provisioning, donations and business development expense. Operating profit expanded by 60.52 percent in 2022 and OP margin also ticked up to 12.78 percent.

The ecstasy proved to be transient as 56.39 percent spike in finance cost due to high discount rate and added borrowings as well as high tax rate due to the imposition of super tax shoved the bottomline down by 6.87 percent year-on-year in 2022 to clock in at Rs. 2155.67 million.

NP margin also plunged to 5.70 percent in 2022 while EPS was recorded at Rs.16.35.

After two consecutive years of topline growth, INIL’s topline was 29.24 percent down to clock in at Rs. 26,786.77 million in 2023.

On account of economic and political instability in the country, shut down of auto industries due to import restrictions and slow construction and infrastructure related activity; LSM shrank by 10.26 percent in 2023 versus LSM growth of 10.6 percent recorded in 2022.

Pakistani steel and iron industry also contracted by 4 percent in 2023 versus growth of 16.6 percent registered in 2022.

As a consequence, local sales volume dampened by 38 percent. Export sales didn’t impress either and underperformed compared to the previous year. Curtailed demand and sales volume reduced the cost of sales by 29.60 percent year-on-year which resulted in a rise in GP margin to 12.77 percent in 2023.

Distribution expense shrank by 45.75 percent in 2023 because of lower freight charges on account of lesser off-take. Administrative expense inched up by a mere 1.96 percent in 2023 due to higher payroll expense on account of inflationary pressure.

Other expense plummeted by 29.58 percent in 2023 due to lesser provisioning done for WWF and WPPF. Other income slid by 5.28 percent in 2023 on the basis of lesser dividend income from associated company and lesser exchange gain. Operating profit declined by 4.63 percent year-on-year in 2023, yet OP margin climbed up to 17.23 percent. 46.54 percent higher finance cost was the result of high discount rate.

The company managed its cash flows and working capital quite well during the year and didn’t require additional borrowings. This is evident in its strong liquidity position.

The company’s gearing level also improved from 60 percent in the past six years to 55 percent in 2023. INIL’s net profit grew by 5.44 percent in 2023 to clock in at Rs.2272.94 million with EPS of Rs.17.23 and NP margin of 8.50 percent.

In 2024, INIL’s net sales posted a marginal year-on-year growth of 9.02 percent to clock in at Rs.29,203.14 million. Import restrictions continued during the year resulting in 37.4 percent contraction in the local automobile industry.

Local iron & steel industry also shrank by 2.2 percent in 2024 due to weaker demand from auto and construction related industries. INIL’s local sales volumes slid by 2.3 percent in 2024, however, sales proceeds inched up by 12 percent during the year.

Export sales proceeds posted a marginal growth of 4 percent in 2024 due to dampened demand in the construction sector of the company’s key export markets.

High energy and conversion cost resulted in 8.56 percent spike in cost of sales in 2024. This resulted in 12.19 percent growth in gross profit in 2024 with GP margin slightly inching up to 13.15 percent.

Distribution expense inched down by 3.39 percent in 2024 due to lower sales volume resulting in thinner freight & forwarding charges. Administrative expense spiked by 21.86 percent in 2024 on account of higher payroll expense, vehicle, travel & conveyance charges as well as legal & professional charges incurred during the year.

Other expense slid by 19.89 percent in 2024 due to lower profit related provisioning and donations. Other income also dampened by 56.26 percent in 2024 due to lower dividend income from International Steels Limited and IIL Australia Pty. Limited as well as exchange loss incurred during the year.

Operating profit dwindled by 28.95 percent in 2024 with OP margin falling down to 11.23 percent. Finance cost dropped by 14.97 percent in 2024 due to better working capital management. This resulted in a decline in the company’s gearing ratio from its historic level of 60 percent in the previous years to 42 percent in 2024.

INIL’s net profit slumped by 35.19 percent to clock in at Rs.1473.13 million in 2024. This translated into EPS of Rs.11.17 and NP margin of 5.04 percent in 2024.

In 2025, net sales of the company plummeted by 14 percent to clock in at Rs.25,096.32 million. This was mainly due to trade protection measures implemented by the major economies of the world which resulted in significant volatility in the raw material prices. Local sales crashed by 10 percent in 2025 to clock in at Rs.22 billion. This was due to misuse of the tax exemptions granted to the FATA/PATA region.

However, these exemptions are scheduled to be removed over the span of next four years. Export sales of the company shrank by 36 percent to clock in at Rs.3.1 billion. This was due to 50 percent tariff imposed by the US government on steel imports which created oversupply and acute price volatility in the global market.

Cost of sales plummeted by 13.46 percent in 2025 due to reduction in sales volume. However, with negative price variations, the company recorded 18 percent decline in its gross profit in 2025 with GP margin falling down to 12.54 percent.

Lower freight charges on account of abridged sales volume was partially offset by higher advertising expense and increased salaries of sales force. This culminated into a marginal 1.78 percent reduction in selling & distribution expense in 2025. Administrative expense ticked up by only 0.531 percent in 2025 due to higher payroll expense on account of inflationary pressure. INIL streamlined its workforce from 930 employees in 2024 to 909 employees in 2025.

Other expense spiked by 7.45 percent in 2025 due to increased auditor remuneration and profit related provisioning. Other income deteriorated by 36 percent in 2025 due to massive decline in income from subsidiaries – International Steels Limited and Chinoy Engineering & Construction Solutions Limited. As against loss allowance recorded on trade receivables for the past three years, INIL recorded a reversal of provision worth Rs.2.12 million in 2025.

Operating profit contracted by 33.68 percent in 2025 with OP margin falling down to 8.66 percent. Finance cost lessened by 58.63 percent in 2025 due to monetary easing and better working capital management. INIL posted net profit of Rs.1104.32 million in 2025, down 25 percent year-on-year. This translated into EPS of Rs.8.37 and NP margin of 4.4 percent. OP and NP margin recorded by the company in 2025 were the lowest since 2021.

Recent Performance (9MFY26)

INIL seems to have made a strong comeback in FY26 as evident by 16.07 percent enlargement in its topline in 9MFY26. Net sales were recorded at Rs.21,653.062 million in 9MFY26. Both local and export sales progressed in 9MFY26. However, local sales continued to be the major growth driver due to greater infrastructure spending and increased construction activity in the country. Sales volume clocked in at 84,529 MT in 9MFY26, up 42.50 percent year-on-year.

Cost of sales mounted by 16.54 percent in 9MFY26. One of the factors for the increased sot was the imposition of off-the-grid levy of Rs.36.11 million imposed on the captive power plants during the period. Elevated energy, freight and raw material cost due to geopolitical tensions in the Middle East also inflated cost during the period. While gross profit ticked up by 12.69 percent in 9MFY26, GP margin clocked in at 11.96 percent against GP margin of 12.32 percent recorded in 9MFY25.

Growing operations, improved sales volume and inflationary pressure resulted in 34.26 percent increase in distribution expense and 24.74 percent increase in administrative expense in 9MFY26.

Other expense ticked down by 4.12 percent in 9MFY26. Other income posted a tremendous growth of 70 percent to clock in at Rs.1271.61 million in 9MFY26. This was on the back of improved dividend income from associated and subsidiary companies. Just like all the years under review, other income completely wiped off other expense in 9MFY26.

Reversal of loss allowance on trade debts also increased by 293.75 percent in 9MFY26. Operating profit improved by 24.92 percent in 9MFY26 with OP margin clocking in at 10.10 percent versus OP margin of 9.34 percent recorded in 9MFY25.

Finance cost lowered by 1.54 percent in 9MFY26 due to monetary easing. Net profit strengthened by 50 percent to clock in at Rs.1210.095 million in 9MFY26 with EPS of Rs.9.18 versus EPS of Rs.6.12 recorded in 9MFY25. NP margin also strengthened from 4.33 percent in 9MFY25 to 5.59 percent in 9MFY26.

Future Outlook

In the local market, increase in infrastructure activity will provide impetus for improved demand in the steel sector. In the global market, the demand is expected to remain lethargic due to weaker demand from key markets like China.

On the brighter side, the company is striving to diversify its product mix by venturing into high-value stainless steel and uPVC segments. The company has also recently invested in Chinoy Engineering & Construction Solutions Limited acquiring 34 percent stake to participate in Reko Diq construction.

It has also established INIL Europe to enhance its geographical presence. Furthermore, the company is also seeking to attain operational efficiency by installing solar power plant across its manufacturing sites.

In order to diversify its operations, the company has decided to venture into mining opportunities in Baluchistan and KPK through consortium with operations managed via joint venture.

On paper, the government remains committed to an ambitious petroleum levy (PL) collection target of roughly Rs1.7 trillion for FY27. The arithmetic behind that target is straightforward. Annual consumption of petrol and high-speed diesel is unlikely to be much different from the roughly 17 billion litres sold in recent years. Even allowing for contributions from other petroleum products, achieving the revenue target would require an average levy substantially higher than where it stands today.

Following the latest price notification, the petroleum levy now stands at Rs70 per litre on both petrol and HSD.

That is where the pricing strategy begins to look inconsistent.

Barely two weeks ago, consumers received a sizeable reduction in retail fuel prices. The decline was not merely a pass-through of lower international prices. It was accompanied by a reduction in the petroleum levy itself, effectively giving away fiscal space that will eventually have to be recovered if the FY27 target is to be met.

The timing makes the decision even harder to reconcile. The beginning of a fiscal year is precisely when governments have the greatest flexibility to gradually build revenue buffers. International oil prices had softened sufficiently to allow part of the benefit to be retained through a higher levy while still delivering consumers a meaningful reduction at the pump. Instead, the government opted to lower the levy alongside retail prices, only to enter FY27 with a levy level that now appears well below what its own budget arithmetic demands.

There is one area, however, where the government has moved exactly as expected.

The Climate Support Levy has now been increased from Rs2.5 per litre to Rs5 per litre, bringing implementation in line with commitments made under the IMF programme. The revision also vindicates concerns raised earlier by BR Research after the FY27 budget documents appeared to assume collections at the lower rate, despite Pakistan’s commitment to double the levy.

But the Climate Support Levy is not where the real revenue challenge lies.

Even after the increase, the CSL contributes only a fraction of the overall revenue requirement. The heavy lifting must still come from the petroleum levy. And that is where the numbers become uncomfortable. Based on current consumption patterns, a FY27 petroleum levy target of around Rs1.7 trillion implies an effective levy well north of current levels. A rate of Rs70 per litre on petrol and HSD leaves a sizeable gap that will eventually need to be bridged.

Perhaps policymakers are simply taking advantage of the breathing room that comes with the start of a new fiscal year. Revenue collection pressures remain limited, quarterly performance benchmarks are still some distance away, and the next IMF review is not imminent. There is little immediate urgency to maximise collections.

That comfort, however, may prove temporary.

The longer the government postpones petroleum levy adjustments, the steeper the eventual increase may need to be. Gradual calibration is almost always easier to implement than large, sudden revisions, particularly once international oil prices begin moving higher again. Today’s relatively benign crude environment offers precisely the kind of opportunity policymakers typically seek to strengthen fiscal buffers.

If that opportunity is allowed to pass, the government may find itself raising the petroleum levy under far less favourable market conditions, making an already difficult fiscal adjustment even more painful.

The company is engaged in the manufacturing and sale of tin plates, cans and other steel products for the packaging of cooking oil, fruits, vegetables, sea food, lubricants etc.

Pattern of Shareholding

As of June 30, 2025, STPL has 229.279 million shares outstanding which are held by 5486 shareholders. Local general public has the highest stake of 41.033 percent in STPL followed by Directors, Sponsors, CEO & children and senior management holding 37.31 percent of its shares.

Associated companies which include Siddiqsons Limited and Siddiqsons Denim Mills limited hold 15.65 percent shares of STPL.

Foreign general public accounts for 4.28 percent shares of the company. The remaining shares are held by other categories of shareholders.

Performance Trail (2021-25)

STPL’s topline which was on the rise until 2021 fell unabatedly in the following years. Except 2021, STPL’s bottomline deteriorated in all other years under consideration with net loss registered in 2024 and 2025.

The margins depicted a mixed pattern over the period. The margins which hit the rock bottom in 2020 rebounded in 2021. In the subsequent three years, STPL’s margins eroded followed by a recovery in 2025. The detailed performance review of the period under consideration is given below.

After experiencing a rough 2020 where the company posted 5 percent thinner topline and a net loss, STPL heaved a sigh of relief as 2021. 2021 proved to be an exceptional year for the company. Its topline boasted the highest ever year-on-year growth of 64.43 percent to clock in at Rs.5847.85 million in 2021. This came on the back of 37 percent and 78 percent rise in local and export off-take respectively during the year. In 2021, the export sales reached 25 percent of the overall revenue of STPL up from 18 percent in 2020.

While cost of sales escalated by 49.45 percent year-on-year in 2021 due to high price of Tin Mill Black Plate, the company was able to pass on the impact of price increase and Pak Rupee depreciation to its customers which resulted in a 343.66 percent year-on-year growth in gross profit. GP margin also reached its highest mark of 13.74 percent in 2021. Administrative expense almost doubled during the year due to legal and regulatory fee paid on the increase of authorized capital.

Distribution cost also grew by 83.51 percent year-on-year in 2021 due to high freight charges which are directly proportional to high export sales. Other expense multiplied by a massive 1680.35 percent during 2021 as the company incurred exchange loss on the import of its raw materials due to depreciation of Pak Rupee coupled with high provisioning for WPPF on the back of high profits made during 2021.

Other income shrank by 78.85 percent during 2021 due to lower profit on bank deposit on account of low discount rate. Despite massive rise in operating and other expenses and a contraction in other income, operating profit grew by 352.35 percent during 2021 with OP margin of 9 percent. Finance cost grew by 39.28 percent during the year despite discount rate cuts due to exchange loss on borrowings.

STPL made a record net profit of Rs.322.16 million in 2021 with NP margin of 5.51 percent. EPS stood at Rs.1.41 in 2021. This was against the net loss of Rs.23.14 million and loss per share of Rs.0.10 recorded in 2020.

The bliss enjoyed by the STPL in 2021 didn’t last longer as 2022 proved to be full of challenges. Record high discount rate, Pak Rupee depreciation, import restrictions and global commodity super cycle not only lowered the demand but also put a pressure on the margins.

The topline plummeted by 19.24 percent year-on-year to clock in at Rs. 4722.75 million as sales volume dropped by 47 percent during 2021. While the company increased its prices by 54 percent year-on-year, it still couldn’t save its topline from shrinking. As the company operated on a curtailed capacity, cost of sales also dropped by 18.65 percent year-on-year in 2022.

Gross profit shrank by 22.92 percent year-on-year with a downtick in GP margin which clocked in at 13.11 percent in 2022. Distribution expense almost halved in 2022 due to lesser export expenses. Admin expenses also plunged by 51.31 percent in 2022 due to lesser legal and regulatory fee.

The company booked massive provision against doubtful advances which could’ve increased other expenses but lower provisioning for WPPF and lesser exchange loss counterbalanced it resulting in a 33.23 percent year-on-year drop in other expense in 2022.

Other income boasted 112.52 percent growth in 2022 as massive decline in the value of local currency provided tremendous exchange gain on export sales. Moreover, high discount rate also drove up the profit on bank deposits.

Despite lower expenses, operating profit slipped by 19 percent year-on-year in 2022 while OP margin remained intact at 9 percent. 35 percent year-on-year growth in finance cost and imposition of super tax resulted in a bottomline slide of 37.53 percent year-on-year to clock in at Rs.201.27 million in 2022 with NP margin of 4.26 percent. EPS for 2022 stood at Rs.0.88.

In 2023, STPL’s topline further eroded by 6.97 percent to clock in at Rs.4393.77 millio. This was due to 7 percent lower sales volume recorded during the year. While STPL increased its prices by 15 percent during the year, it couldn’t completely pass on the onus of cost hike which came on the back of extreme fluctuations in global commodity prices coupled with Pak Rupee depreciation.

Consequently, gross profit tumbled by 35.41 percent in 2023 with GP margin sliding down to 9.10 percent. Distribution expense leveled down by 33.61 percent in 2023 on account of considerably lower export expense and payroll expense incurred during the year.

Administrative expense multiplied by 14.81 percent in 2023 due to increased payroll expense in line with inflationary trend as well as increased provision for doubtful debt. Lower profit related provisioning, no provision against advances as well as no exchange loss culminated into 89.62 percent decline in other expense in 2023.

On the positive front, other income mounted by 135.11 percent in 2023 primarily due to hefty profit recognized on bank deposits and exchange gain recognized on foreign trade receivables.

Despite keeping a check on operating expense and a considerable improvement in other sources of income, operating profit slumped by 37.56 percent in 2023 with OP margin shrinking to 6.06 percent. STPL’s finance cost mounted by 27.85 percent in 2023 due to unprecedented level of discount rate. This translated into 98.47 percent year-on-year decline in STPL’s net profit which clocked in at Rs.3.08 million in 2023 with EPS of Rs.0.01 and NP margin of 0.07 percent.

In 2024, STPL’s net sales further deteriorated by 7.24 percent to clock in at Rs.4075.69 million. Besides adverse macroeconomic conditions which took its toll on the demand, unrestricted import of secondary tinplate at considerably lower rates destroyed the company’s ability to maintain its market share in the face of unprecedented level of inflation, discount rate, high cost of raw materials, elevated energy tariff and Pak Rupee depreciation.

The sales tax exemptions provided to FATA/PATA region was another downside risk for the company. The unusual use of Galvalume sheets (primarily used in construction industry) for food packaging also created demand distortion of STPL’s products.

Supply chain disruptions due to difficulty in opening L/Cs added to ado. Two major production halts during the year due to labor issues posed another challenge for the company. Capacity utilization fell to 6.96 percent in 2024 from 9 percent in 2023. The company recorded 27 percent decline in production volume.

Sales volume also fell by 7 percent in 2024. Cost of sales surged by 3.44 percent due to idle capacity which increased fixed cost per unit. This resulted in gross loss of Rs.55.47 million in 2024.

Lower sales volume resulted in 29.52 percent thinner distribution expense in 2024. Administrative expense fell by 18.19 percent in 2024 due to lower payroll expense as the company rationalized its workforce from 198 employees in 2023 to 132 in 2024. 1271.90 percent spike in other expense in 2024 was the result of provisioning done for WWF & advances against L/C fee and expenses, advance tax and other advances written off during the year as well as unrealized exchange loss on foreign trade receivables.

Other income dipped by 17 percent in 2024 mainly due to the fact that unlike last year, the company didn’t record unrealized gain on foreign trade receivables.

Other factors which contributed to desolate financial performance in 2024 were provision worth Rs.68.25 booked for ECL, provision worth Rs.820.968 million booked for contingency and impairment loss worth Rs.306.13 million recorded in 2024.

STPL posted a hefty operating loss of Rs.1401.11 million in 2024. Finance cost mounted by 177 percent in 2024 due to monetary tightening and increased borrowings. Net loss clocked in at Rs.2058.499 million in 2024. This translated into loss per share of Rs.8.98 in 2024.

The deterioration in net sales which started in 2022 continued in 2025 to the tune of 50.36 percent. This translated into net sales of Rs.2023.04 million in 2025. The challenges such as tax exemptions provided to FATA/PATA region, uninhibited import of secondary tinplate at lower rates and use of Galvalume sheets in food remained unresolved in 2025. STPL filed petitions against these issues but to no avail. Production volume fell by 32.95 percent to clock in at 5599 metric tons in 2025. This resulted in capacity utilization of 4.67 percent in 2025.

Decline in inflation, stability of international commodity prices and stronger Pak Rupee enabled the company to squeeze its cost by 56.40 percent in 2025. This resulted in gross profit of Rs.221.78 million in 2025 as against gross loss of Rs.55.47 million recorded in the previous year. GP margin was recorded at 10.96 percent in 2025.

Distribution and administrative expense fell by 18.85 percent and 18.97 percent respectively due to streamlined operations. Number of employees was further reduced to 109 in 2025. High-base effect due to one-off expenses recorded in the previous year resulted in 80.24 percent lower other expense in 2025 (refer to 2024 analysis for the details of one-time other expense).

Other income strengthened by 31.65 percent in 2025 due to gain recognized on the disposal of fixed assets and other miscellaneous income. No impairment loss and provision for contingency was booked during the year. Provision for ECL also fell by 96.85 percent in 2025.

All these factors translated into operating profit of Rs.153.16 million in 2025 as against operating loss of Rs.1401.11 million recorded in the previous year. OP margin clocked in at 7.57 percent in 2025. Finance cost shrank by 35.76 percent in 2025 due to monetary easing and settlement of outstanding borrowings. Net loss slid by 87.61 percent to clock in at Rs.255.117 million in 2025 with loss per share of Rs.1.11.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, STPL recorded a staggering 41.31 percent growth in its net sales which clocked in at Rs.2158.66 million. This was on the back of tremendous growth recorded in local sales.

Export sales worth Rs.83 million were also recognized during the period versus no export sales recorded in the comparable period of last year. This was due to improved availability of raw materials which enabled the company to make the most of the available demand and increase its production and sales volumes.

The recent imposition of anti-dumping duty on secondary tin-plate by National Tariff Commission (NTC) has greatly buttressed the demand of locally produced tin-plate. Gross profit improved by 23.43 percent in 9MFY26; however GP margin ticked down to 13.95 percent versus GP margin of 15.97 percent recorded in 9MFY25. This was due to increased competition from alternative packaging materials such as galvalume. Distribution expense hiked by 97 percent due to increased sales volume and venturing into export market.

Conversely, administrative expense ticked down by 13.65 percent in 9MFY26 despite enhancement in operations. This was due to operational efficiency attained after restructuring of operations done in 2025. Increased provisioning done for WWF and WPPF appears to be the cause of 310.96 percent higher other expense incurred during 9MFY26.

Other income deteriorated by 77.76 percent in 9MFY26, however, conveniently offset other expense, resulting in net other income of Rs.9.59 million, down 81.58 percent year-on-year. Thinner other income could be the result of lower mark-up income due to monetary easing and a massive drop in the company’s TDR investment.

STPL recorded 7.53 percent uptick in its operating profit in 9MFY26 with OP margin clocking in at 10.91 percent versus OP margin of 14.34 percent recorded in 9MFY25. Finance cost dwindled by 53 percent in 9MFY26 due to monetary easing while borrowings escalated.

The company was able to record net profit of Rs.33.026 million with EPS of Rs.0.14 in 9MFY26 versus net loss of Rs.174.25 million and loss per share of Rs.0.76 recorded in 9MFY25. NP margin clocked in at 1.53 percent in 9MFY26.

Future Outlook

Macroeconomic indicators demonstrated signs of stability of-late resulting in improved demand.

However, the company couldn’t take optimum advantage of the demand recovery in the face of stiff competition from unlawful sources. This issue has been greatly resolved by the imposition of anti-dumping duty of 40 percent and increase in customs duty from 1.56 percent to 17 percent by NTC. To make up for the lost sales in the home market, STPL is actively exploring export avenues in the GCC, Europe and the US.

The company has also reportedly resolved its labor issues and supply chain issues and is all set to tap new geographical markets to improve its financial performance.

June captured that weakness clearly. OMC volumes fell to by nearly 20 percent year-on-year. Excluding furnace oil, volumes were down 15 percent, showing how quickly fuel demand can soften when prices rise sharply and when the economy is still operating with limited purchasing power.

Petrol sales fell 11 percent year-on-year, while high-speed diesel declined by a much sharper 20 percent. Furnace oil remained the weakest product, falling 68 percent year-on-year.

The only comfort in June was sequential. Compared to May, total OMC sales were up 7 percent. Petrol volumes rose 5 percent month-on-month, while HSD improved 9 percent. This was helped by some price relief during the month as global oil prices cooled and geopolitical pressure eased. But the month-on-month recovery should not be confused with a real demand rebound. Volumes were still well below last year’s level, and the price shock had already done enough damage to demand.

During FY26, petrol remained the most resilient part of the marketrising one percent. This reflects the relative stickiness of urban mobility demand. Even when prices rise, consumers reduce discretionary travel but cannot fully avoid daily commuting. Two-wheelers, ride-hailing, small cars, and urban transport needs keep petrol demand from falling too sharply.

Diesel, however, was almost flat for the year and weak in June. FY26 HSD sales stood slightly lower than last year. The June decline was far steeper because diesel demand is more linked to freight, agriculture, construction, and broader economic activity. Elevated domestic diesel prices also appear to have revived incentives for cross-border smuggling, which continues to distort formal demand.

Furnace oil remained in structural decline. FY26 FO sales fell 26 percent. This is not just a cyclical decline. FO has been losing relevance in the power mix as hydel, nuclear, imported fuels and renewables take a larger role. The sharp year-on-year fall in June was therefore not surprising.

The month-on-month rise in FO sales was more seasonal, linked to higher summer power demand, rather than a sign of durable recovery.

As for the outlook, if international oil prices remain soft and domestic prices continue to ease, petrol and diesel volumes could recover sequentially in the coming months.

But the recovery is unlikely to be aggressive unless prices fall meaningfully and stay lower. Real incomes are still stretched, freight activity is not booming, and the government’s revenue needs leave little room for sustained relief at the pump.

FY26 therefore ends as a year of apparent stability but fragile demand. The headline number says OMC sales were broadly flat. The closing month says consumers and businesses are price sensitive, diesel demand is vulnerable, and furnace oil is fading further. For FY27, the direction of OMC sales will depend less on market share and more on three variables: oil prices, petroleum levy policy, and the strength of real economic activity.

Besides having an export market in over ten countries across the globe, FML also caters to the needs of local market. The company is partnered with 1888 Mills (USA) and has its manufacturing units in Sindh and Balochistan.

Pattern of Shareholding

As of June 30, 2025, FML has a total of 399.409 million shares outstanding which are held by 1285 shareholders. Individuals have the majority stake of 35.69 percent in FML followed by Directors, CEO and their spouse holding 32.38 percent shares.

Associated companies, undertakings and related parties account for 30.17 percent shares of FML while joint stock companies hold 1.66 percent of FML’s outstanding shares. The remaining shares are held by other categories of shareholders.

Performance Trail (2021-2025)

Except for a year-on-year downtick in 2025, FML’s topline posted growth in all the years under consideration. Conversely, its bottomline posted growth twice during the period i.e. in 2021 and 2023. FML’s margins which peaked in 2019 plunged for the next three years except for a trivial uptick in operating and net margins in 2021. In 2023, the margins staggeringly rebounded which was followed by a drastic fall in 2024 and 2025. The detailed performance review of the period under consideration is given below.

2021 was a vigorous year for FML, characterized by 36.43 percent year-on-year topline growth coming on the back of both local and export sales. FML’s net sales clocked in at Rs.42,575.47 million in 2021.

The US market represented the major export destination for the company with a share of 83 percent in the net sales of FML in 2021. Increased yarn prices, Pak Rupee depreciation, hike in fuel and power cost etc took its toll on the cost of sales which grew by 36.62 percent year-on-year in 2021. While gross profit enhanced by 35.78 percent in 2021, GP margin dropped to 22.43 percent.

Operating expense grew mainly on account of marketing expense, freight, forwarding and insurance charges and also because of higher payroll expense as number of employees grew to 13,354 in 2021. Other income and other expense gave some breather as the company reversed the provision for doubtful advances and also because of higher dividend income on open ended mutual fund units.

Operating profit grew by 47.29 percent year-on-year with OP margin clocking in at 12.56 percent in 2021. Finance cost continued to grow despite slashed discount rate as the company’s long-term and short-term borrowings as well as lease liabilities enlarged during the year which also drove its gearing ratio up to 51.33 percent in 2021.

FML’s bottomline posted 46.78 percent year-on-year growth in 2021 to clock in at Rs.4311.29 million with EPS of Rs. 11.30 and NP margin of 10.13 percent. This was against EPS of Rs. 7.80 and NP margin of 9.41 percent registered in 2020.

2022 was a difficult year not only for the textile sector but for the economy as a whole. Soaring inflation, sharp depreciation of Pak Rupee, multiple upward revisions in discount rate coupled with import restrictions and subdued purchasing power of consumers were the challenges that began to raise their heads in 2022 and continued even in 2023.

The topline of FML grew by 15.13 percent year-on-year to clock in at Rs.49,018.46 million in 2022. The topline couldn’t sustain the rise in cost of sales due to the challenges quoted above. As a result gross profit took 20.18 percent year-on-year plunge in 2022 with GP margin drastically falling down to 15.55 percent.

The company had never seen such a thin GP margin since 2014. Administrative and distribution expenses multiplied by 12.50 percent and 25.50 percent respectively in 2022. This was on the back of elevated freight charges and higher payroll expense despite the fact that FML’s workforce shrank to 12,643 employees in 2022. Other income gave major support to the bottomline as it multiplied by 638 percent in 2022 on the back of hefty exchange gain.

Other expense also slumped by 55.85 percent in 2022 due to no exchange losses incurred during the year coupled with lower profit related provisioning done in 2022. Operating profit eroded by 10.50 percent year-on-year in 2022 with OP margin clocking in at 9.76 percent.

Finance cost grew by 19.17 percent year-on-year in 2022 on the back of multiple rate hikes during the year as well as increased borrowings.

However, increased share capital due to issue of right shares resulted in a lower gearing ratio of 43 percent in 2022. FML’s bottomline dropped by 20.94 percent year-on-year in 2022 to clock in at Rs.3408.45 million with EPS of Rs.8.76 and NP margin of 6.95 percent.

During 2023, FML’s topline registered 16.39 percent year-on-year growth to clock in at Rs.57,051.83 million.

The main reason behind higher net sales was 45 percent depreciation of Pak Rupee resulting in tremendous exchange gain. Elevated proportion of export sales in the total sales mix of FML coupled with Pak Rupee depreciation conveniently absorbed the cost of sales, resulting in 69.94 percent higher gross profit recorded by the company in 2023. GP margin climbed up to 22.71 percent in 2023.

Administrative expense hiked by 50.63 percent year-on-year in 2023 on account of higher payroll expense as FML hired additional resources to take its workforce up to 13,127 employees in 2023.

Higher travelling & conveyance charges also contributed towards elevated administrative expense recorded by the company in 2023. Distribution expense also grew by 3.90 percent in 2023 due to higher marketing and other related expenses incurred during the year. 107.55 percent spike in other expense in 2023 was the result of higher provisioning for WWF, WPPF and ECL.

However, it was nullified by a tremendous other income of Rs.4721.34 million recorded by FML in 2023 due to robust exchange gain and dividend income. Operating profit mounted by 145.85 percent year-on-year in 2023 with OP margin of 20.62 percent.

Finance cost magnified by 199.23 percent in 2023 due to unprecedented level of discount rate coupled with increased short-term borrowings. Gearing ratio also picked up to 52.19 percent in 2023.

FML posted 163.15 percent taller net profit to the tune of Rs. 8969.46 million in 2023 with EPS of Rs.22.46 and NP margin of 15.72 percent.

In 2024, FML’s topline picked up by 22.27 percent to clock in at Rs.69,757.60 million. As of June 30, 2024, export sales comprised of 96.62 percent of FML’s net sales. Export sales showed great resilience and mounted by 21.83 percent in 2024. This mainly encompassed sales to America and European region.

Cost of sales surged by 31.36 percent in 2024 due to elevated energy and gas prices. This coupled with the stability portrayed by Pak Rupee during the year, squeezed the margins on export sales. This resulted in 8.67 percent downtick recorded in gross profit in 2024. GP margin also fell to 16.96 percent in 2024. Administrative expense surged by 14.79 percent in 2024 on the back of higher payroll expense, elevated utility charges as well as greater conveyance & travelling charges incurred during the year.

FML expanded its workforce from 10,908 employees in 2023 to 12,483 employees in 2024. Distribution expense mounted by 22.21 percent in 2024 due to higher marketing budget as well as freight & insurance charges incurred during the year. Other expense ticked down by 0.60 percent in 2024 as considerably lesser profit related provisioning done during the year was greatly offset by hefty net exchange loss.

Other income also fell by 88.24 percent in 2024 as FML didn’t record any exchange gain. Operating profit tapered off by 54.25 percent in 2024 with OP margin registering its lowest level of 7.72 percent. Finance cost escalated by 92.65 percent in 2024 due to higher discount rate and increased short-term borrowings. This resulted in a gearing ratio of 57.84 percent in 2024.

FML’s net profit eroded by 93.62 percent to clock in at Rs.572.341 million in 2024. This translated into EPS of Rs.1.43 and NP margin of 0.82 percent in 2024.

In 2025, FML’s net sales narrowed down by 5.23 percent to clock in at Rs.66,110.53 million. This was due to increased competition and high recession in the international market. In 2025, export sales comprised of 96.63 percent of FML’s topline – almost similar to previous year.

Higher cost of sales due to elevated energy tariff resulted in 23.60 percent decline in gross profit in 2025. GP margin also fell to 13.67 percent in 2025. Administrative expense ticked up by 2 percent in 2025 due to inflationary pressure which pushed up the payroll expense. This was despite the fact that the company streamlined its workforce from 12,483 employees in 2024 to 11,432 employees in 2025. Tighter export sales resulted in 8.81 percent downtick recorded in distribution expense in 2025.

No exchange loss recorded during the year and lesser provisioning done for WWF and WPPF resulted in 64.13 percent decline in other expense in 2025. Other expense was offset by 59.19 percent growth recorded in other income in 2025 which came on the back of hefty exchange gain recognized during the year.

FML’s operating profit slumped by 31.27 percent in 2025 with OP margin dipping to 5.60 percent. Finance cost thinned down by 20 percent in 2025 due to lower discount rate while borrowings continued to escalate. FML recorded 82.70 percent weaker net profit to the tune of Rs.99.023 million in 2025. This culminated into EPS of Rs.0.25 and NP margin of 0.15 percent in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, FML recorded 4.97 percent uptick in its net sales which clocked in at Rs.49,682.217 million. Amid ongoing geopolitical tensions in the Middle East region and evolution of trade policies in the major export markets, FML focused on diversifying its customer base and enhance the share of value-added products in its sales mix.

Despite concerted efforts, higher cost of sales due to elevated energy cost didn’t allow the company to record any improvement in its gross profit which ticked down by 14.17 percent in 9MFY26. GP margin clocked in at 11.31 percent in 9MFY26 versus GP margin of 13.83 percent recorded in 9MFY25.

Administrative expense tumbled by 17.24 percent in 9MFY26 due to streamlined operations amid weaker demand. Conversely, distribution expense surged by 14.67 percent in 9MFY26 likely due to increased petroleum prices and supply chain impediments in executing export orders on the back of geopolitical tensions.

Greater provisioning done for WWF and WPPF appears to be the cause of 18.10 percent higher other expense recorded in 9MFY26. Other expense was wiped off by 123.29 percent higher other income recognized during the period which appears to be the result of exchange gain.

FML recorded net other income of Rs.1541.63 million in 9MFY26, up 133.19 percent year-on-year. Operating profit diminished by 11.50 percent in 9MFY26 with OP margin clocking in at 5.14 percent versus OP margin of 6.10 percent recorded in 9MFY25.

Finance cost tumbled by 22.69 percent in 9MFY26 due to monetary easing. Net profit rebounded by 620.31 percent to clock in at Rs.98.575 million in 9MFY26. This translated into EPS of Rs.0.25 and NP margin of 0.20 percent in 9MFY26 versus EPS of Rs.0.03 and NP margin of 0.03 percent recorded in 9MFY25.

Future Outlook

The company is aggressively looking to expand in the international market. To enhance its export sales, the company has recently announced the formation of wholly owned subsidiaries in UK and UAE. FML is also actively seeking for ways to reduce its energy cost by installing a solar unit and also by enhancing its capacity.

With high receivables and inventory (collectively exceeding Rs.37 billion) and low cash (Rs.536 million to be exact), FML’s has a heavy debt load (total liabilities of Rs. 53.54 billion) as of March 31, 2026. Borrowings will continue to surge in order to scale its operations. In this regard, reduction in Export Refinance Scheme (EFS) rates is an encouraging development for the company as well as for the export oriented sector in general.

On 31 March 2026, Liberty Mills Limited acquired 37.40 million shares of FML which took its total shareholding in the company to 74.188 million shares (or 18.57 percent of the total outstanding shares).

The June reading was broadly in line with expectations, although a few surprises beneath the surface helped keep inflation marginally lower than street consensus. The biggest contribution came from transport fuels and electricity, both of which moved decisively lower during the month. The result is that, barring a major geopolitical or climate shock, the era of double-digit inflation may finally be drawing to a close.

Transport provided the biggest relief. Petrol prices fell sharply during the month, resulting in the steepest monthly decline ever recorded in the motor fuels sub-index, excluding the extraordinary collapse witnessed during the peak of the Covid pandemic in April 2020.

While petroleum prices may see a modest upward adjustment in the coming month, particularly if additional petroleum levy is passed through, the magnitude is unlikely to reverse the broader disinflationary trend unless global oil markets are hit by another major disruption.

Housing and utilities also remained supportive. Electricity charges declined 4.3 percent month-on-month as the negative quarterly tariff adjustment of Rs1.98 per unit more than offset the positive fuel cost adjustment of Rs1.19 per unit.

The average national domestic electricity tariff now stands at Rs25.57 per unit, well below the peak of Rs31.69 per unit reached in March 2024. With the negative quarterly adjustment remaining in place for another two months and July’s fuel cost adjustment also expected to stay modest, electricity prices are on course to decline by another 1.2 percent in next month’s CPI reading.

The gas pricing front remains the only meaningful uncertainty, although any revision, if announced, is expected to be considerably smaller than those seen over the past year.

The decline in headline inflation came despite food inflation quietly becoming a bigger concern. Food inflation remained below 9 percent year-on-year but still registered its fastest increase in 27 months. Wheat flour was the principal culprit.

Prices surged nearly 60 percent year-on-year, the fastest increase in 30 months, carrying considerable influence owing to its position as the second-largest item in the food basket. The encouraging sign, however, is that the pace of increase slowed meaningfully during June, with month-on-month gains easing to around 2 percent from 11 percent recorded in May.

Perishable food items once again reminded everyone why they are among the most volatile components of the basket. Seasonal movements in vegetables, chicken and eggs produced large swings across the month, but these remain largely temporary and are unlikely to alter the medium-term inflation trajectory unless weather conditions deteriorate materially.

Outside food, cigarettes registered the sharpest monthly increase in two years, reflecting continued tax-driven price adjustments. Personal effects, meanwhile, provided an unexpected offset as softer international gold and silver prices pulled the index lower, aided by the relatively large weight assigned to precious metals within the category.

One unusual feature of the June data was the decline in marriage hall charges, which fell 4 percent month-on-month. Such an occurrence is exceptionally rare and has not been observed in at least seven years. The anomaly partly explains why the headline reading came in marginally below market expectations.

Core inflation, meanwhile, continued to move in the right direction. Urban core eased to 8.7 percent while rural core moderated to 9.6 percent, suggesting that the second-round effects from the fuel shock may be losing momentum. This interpretation is reinforced by developments in wholesale prices.

The Wholesale Price Index registered a 1.2 percent month-on-month decline, the steepest fall since April 2025, indicating that pipeline price pressures are beginning to unwind rather than intensify.

For policymakers, the latest inflation print should come as welcome news. The combination of easing energy prices, moderating core inflation and declining wholesale prices strengthens the case that the recent inflation spike was driven more by cost shocks than by broad-based demand pressures.

The outlook now appears considerably more favourable than it did just a few months ago. Provided global energy markets remain stable and no major climate event disrupts domestic food supplies, headline inflation is likely to remain below 9 percent through the first half of FY27 before easing further thereafter.

That said, one risk continues to loom larger than the others. The probability of an El Niño event continues to rise, and with it the possibility of renewed pressure on food prices. For now, inflation appears to be firmly on the way down. Whether it stays there may depend less on domestic policy and more on developments in the weather and global commodity markets.

The core areas of operations include production, advertisement, media marketing and entertainment.

Pattern of Shareholding

As of June 30, 2025, HUMNL has a total of 1134 million shares outstanding which are held by 4591 shareholders. Directors, their spouse and minor children have the majority stake of around 54.6 percent in the company followed by Banks, DFIs, NBFIs, Modarabas, Insurance, Takaful and Pension funds collectively holding 14.73 percent shares.

Local general public account for 14.42 percent stake in the company. Around 2.70 percent of HUMNL shares are held by Mutual Funds. The remaining ownership is distributed among other categories of shareholders.

Historical Performance (2019-25)

Over the period under consideration, HUMNL’s topline slid in 2019, 2020 and 2025. Revenue slide resulted in net losses in 2019 and 2020, however, in 2025, the company’s bottomline stayed in the positive zone. HUMNL’s margins which drastically fell in 2019, recovered in 2020 and 2021. In 2022, gross profit picked up but operating and net margins posted marginal downtick. In 2023, all the margins registered incredible growth. Gross margin continued its upward journey in 2024, however, operating and net margins slightly dipped. In 2025, all the margins posted decline. The detailed performance review of the period under consideration is given below.

In 2019, HUMNL’s topline dipped by 13.68 percent year-on-year to clock in at Rs.3979.10 million. This was on account of massive decline in advertisement, production and film distribution revenue which offset the effect of robust subscription income and an uptick in digital revenue in 2019. Despite thinner revenue, production and transmission cost mounted by 22.50 percent and 8.63 percent respectively on account of inflationary pressure which particularly took its toll on the salaries & benefits expense as well as cost of in-house and outsourced programs.

Gross profit shrank by 81.59 percent in 2019 with GP margin drastically falling down from 34.24 percent in 2018 to 7.30 percent in 2019. Distribution expense slid by 7.52 percent in 2019 due to lower salaries expense of marketing staff coupled with lesser advertising & promotion budget allocated for the year.

Travelling & conveyance expense also dropped in 2019. Administrative expense slumped by 5.93 percent in 2019 due to lower payroll expense as the company considerably downsized its workforce from 981 employees in 2018 to 791 employees in 2019. Other income strengthened by 54.19 percent in 2019 due to robust exchange gain, profit on bank accounts as well as interest income.

Despite keeping a check on its operating expenses and recognizing a hefty other income, HUMNL posted operating loss of Rs.311.48 million in 2019 as against operating profit of Rs.845.30 million recorded in 2018.

Finance cost escalated by 332.19 percent in 2019 due to higher discount rate as well as a momentous spike in the company’s short-term borrowings. This resulted in a gearing ratio of 42.96 percent in 2019 versus gearing ratio of 28.34 percent recorded in the previous year.

The company posted net loss of Rs.535.884 million in 2019 versus net profit of Rs.729.49 million posted in 2018. Loss per share stood at Rs.0.57 in 2019 versus EPS of Rs.0.77 recorded in 2018.

In 2020, HUMNL’s topline further slumped by 7.53 percent year-on-year to clock in at Rs.3679.47 million. In line with last year, advertisement, production and film distribution revenue declined during the year while subscription income and digital revenue increased.

Unlike last year, where cost of production and transmission continued to hike despite lesser revenue, in 2020, the company was able to cut down its production and transmission cost by 21.15 percent and 28 percent respectively. This was mainly because the company kept a check on its cost of outsourced and in-house programs and also incurred lesser salaries expense.

Gross profit mounted by 169.84 percent in 2020 with GP margin staggeringly picking up to 21.31 percent.

Distribution expense shrank by 10.90 percent in 2020 primarily due to lesser salaries of distribution network and also because of lesser travelling & conveyance as well as advertising & promotion budget allocated for the year. Administrative expense slipped by 4.74 percent in 2020 as the company further curtailed its workforce to 771 employees.

Other income weakened by 17.60 percent in 2020 due to lesser exchange gain and lesser profit on bank accounts. During the year, the company also recorded other expense of Rs. 97.61 million owing to provision of impairment booked on other receivables and investment in subsidiary.

HUMNL recorded operating profit of Rs.105.33 million in 2020 with OP margin of 2.86 percent. Finance cost escalated by 68.56 percent in 2020 due to higher discount rate for most part of the year. Lesser outstanding borrowings in 2020 resulted in gearing ratio of 35.94 percent.

Higher finance cost dragged the company’s bottomline to the negative zone. Net loss stood at Rs.113.239 million in 2020, down 78.87 percent year-on-year. This translated into loss per share of Rs.0.12 in 2020.

In 2021, HUMNL’s net revenue grew by 17.61 percent year-on-year to clock in at Rs.4327.33 million. This was mainly the result of robust 46 percent year-on-year growth in subscription income recorded in 2021. Except film distribution, all other revenue streams performed well during the year.

Cost of production inched up by just 0.39 percent in 2021 while transmission cost dipped by 34.97 percent. This resulted in 87.43 percent stronger gross profit in 2021 with GP margin climbing up to 33.97 percent. Distribution expense tumbled by 15.88 percent in 2021 predominantly due to lower advertising & promotion budget.

Conversely, administrative expense grew by 7.46 percent in 2021 due to higher payroll expense. This was despite the fact that the company kept squeezing its workforce which stood at 711 employees in 2021. Other income eroded by 7.53 percent in 2021 due to exchange loss incurred and considerably lower mark-up income recorded during the year.

Other expense spiked by 57.60 percent in 2021 mainly on account of provision booked for impairment of investment in subsidiary, Sky Line Publication (Private) limited.

During the year, HUMNL also recognized gain worth Rs. 476.83 million on the sale of non-current assets (land located in Karachi) held for sale. This resulted in a marvelous operating profit of Rs.1207.51 million in 2021, up 1046.40 percent year-on-year. OP margin was recorded at 27.90 percent in 2021.

Finance cost slipped by 58.43 percent in 2021 due to lower discount rate as well as payment of a large portion of outstanding liabilities during the year. This pushed the gearing ratio down to 19.14 percent in 2021.

HUMNL recorded net profit of Rs.1014.396 million in 2021 with EPS of Rs.1.07 and NP margin of 23.44 percent.

HUMNL’s topline grew by 39.09 percent to clock in at Rs. 6018.97 million in 2022. While all the revenue streams performed quite well during the year, the show-stoppers were Hum news and digital media sector revenues which grew by 133 percent and 84 percent respectively. This was the result of a change in the company’s social media strategy.

Cost of production and transmission grew by 24.85 percent and 10.76 percent respectively in 2022. Gross profit improved by 67.65 percent in 2022 with GP margin attaining a new high level of 40.94 percent. This was due to efficient cost management. Distribution expense mounted by 48.36 percent in 2022 due to increased advertisement & promotion budget and increased salaries of distribution network.

Administrative expense mounted by 14.31 percent on account of higher payroll expense due to inflationary pressure while workforce stood at almost the same level as last year.

Other income slid by 47.10 percent in 2022 as the company recognized unrealized loss on the revaluation of its investments and also incurred loss on the sale of its investments.

Other expense dropped by 81.72 percent in 2022 due to high-base effect as the company booked provision for impairment of investment in subsidiary last year. Operating profit strengthened by 31.53 percent in 2022 with OP margin slightly ticking down to 26.39 percent.

HUMNL was able to cut down its finance cost by 26.91 percent in 2022 despite high discount rate. This was because the company paid off a considerable portion of its outstanding liabilities. This resulted in gearing ratio of 14.3o percent in 2022. Net profit improved by 34.45 percent in 2022 to clock in at Rs.1363.91 million with EPS of Rs.1.2 and NP margin of 22.66 percent.

In 2023, HUMNL’s topline increased by 13.4 percent to clock in at Rs.6825.59 million. Advertisement and subscription income continued to impress during the year. Production revenue also posted an uptick. However, film distribution and digital revenue ticked down.

Massive decline in fee paid for managing digital subscriptions of the company resulted in only 2.48 percent uptick in cost of production in 2023 despite acute inflationary pressure. Transmission cost hiked by 26.49 percent in 2023.

The company recorded 28.18 percent improved gross profit in 2023 with GP margin climbing up to 46.28 percent. Elevated salaries of distribution network and increased advertising budget resulted in 17.23 percent spike in distribution expense in 2023. Administrative expense posted a whopping 51.70 percent surge in 2023 due to increase in payroll expense as well as generous donations distributed during the year.

HUMNL increased its workforce from 676 employees in 2022 to 721 employees in 2023. A staggering growth of 640.77 percent in the company’s other income in 2023 was the result of massive exchange gain as the local currency reached its lowest level during the year.

Besides, reversal of ECL, reversal of liabilities no longer payable as well as robust dividend income and profit on bank deposits also contributed in driving up the other income in 2023. Other expense dipped by 73.96 percent in 2023 as the company didn’t book any allowance for ECL during the year.

Operating profit posted 56.52 percent rise in 2023 with OP margin mounting to an unprecedented level of 36.42 percent. Finance cost shrank by 37.21 percent in 2023 due to payment of outstanding liabilities which squeezed the gearing ratio to 2.22 percent.

HUMNL recorded 57.58 percent improvement in its net profit which clocked in at Rs.2149.24 million in 2023 with EPS of Rs.1.9 and NP margin of 31.49 percent.

In 2024, HUMNL’s revenue grew by 21.71 percent to clock in at Rs.8307.67 million. This was on account of superior performance across the segments – advertisement, production, subscription, film distribution and digital revenue. Due to efficient cost control measures, cost of production grew by just 13.10 percent in 2024, while transmission cost took 4.37 percent dive. This resulted in 32.41 percent stronger gross profit in 2024 with GP margin attaining the highest ever level of 50.34 percent.

Distribution expense mounted by 28.28 percent in 2024 due to increase in salaries as well as advertisement and promotion expense incurred during the year. Administrative expense surged by 11.83 percent in 2024 due to elevated payroll expense on account of inflation and also because the workforce was enhanced to 756 employees.

Other income slid by 34.74 percent in 2024 due to high-base effect as the company recorded massive exchange gain and booked reversal of ECL in the previous year. Other expense escalated by 1471.87 percent in 2024 due to massive exchange loss and allowance for ECL booked during the year. Operating profit picked up by 19.18 percent in 2024 with OP margin slightly ticking down to 35.66 percent. Finance cost continued to slide as the company discharged its liabilities.

Gearing ratio diminished to 1.97 percent in 2024. HUMNL recorded 21.47 percent growth in its net profit which clocked in at Rs.2610.59 million in 2024 with EPS of Rs.2.3 and NP margin of 31.42 percent.

In 2025, HUMNL’s net sales ticked down by 3.55 percent to clock in at Rs.8012.81 million. Around 62 percent of the company’s revenue comprised of advertisement revenue followed by subscription revenue constituting 27 percent of the revenue mix – both of which weakened during the year.

Except digital revenue, all other revenue streams also posted a drop in 2025. Despite revenue slide, cost of production and transmission cost spiked by 4.40 percent and 9.88 percent respectively in 2025 due to inflationary pressure. This resulted in 11.55 percent thinner gross profit in 2025 with GP margin falling down to 46.17 percent.

Distribution expense mounted by 37.98 percent in 2025 due to elevated salaries of sales force and hefty advertisement & promotion budget allocated for the year. Administrative expense also surged by 18.49 percent in 2025 primarily due to higher payroll expense, depreciation expense as well as travelling & conveyance expense incurred during the year. HUMNL expanded its workforce from 756 employees in 2024 to 780 employees in 2025.

Other income considerably buttressed the financial performance of the company in 2025 as it strengthened by 70.14 percent on the back of exchange gain, superior unrealized gain on the revaluation of investments and greater dividend income.

Other income was partially offset by 130.75 percent spike in other expense in 2025 which was the consequence of greater allowance for ECL and provisioning done for impairment against long-term investments. Operating profit diluted by 24.57 percent in 2025 with OP margin sliding down to 27.89 percent.

Finance cost tapered off by 5.47 percent in 2025 due to monetary easing and lesser outstanding debt at the end of the year. Gearing ratio hit its lowest level of 1.34 percent in 2025. HUMNL posted net profit of Rs.2102.987 million in 2025, down 19.44 percent year-on-year. This translated into EPS of Rs.1.85 and NP margin of 25.25 percent in 2025.

Recent Performance (9MFY26)

During the nine-month period of the ongoing fiscal year, HUMNL posted 12.70 percent slide in its revenue which clocked in at Rs.5552.93 million. While subscription income considerably increased during the year, it was offset by a plunge in revenue from all other streams – advertisement, production, digital sales and film distribution.

Cost of production slid by 0.22 percent in 9MFY26 due to a downtick recorded in the cost of outsourced programs, salaries expense and utility expense during the period.

Transmission cost ticked up by 2.54 percent in 9MFY26. This resulted in 26.31 percent weaker gross profit in 9MFY26 with GP margin clocking in at 40.50 percent versus GP margin of 47.98 percent recorded in 9MFY25.

Distribution expense tapered off by 29.89 percent in 9MFY26 likely due to thinner advertisement budget. Administrative expense continued to tick up by 1.52 percent during the period under review due to the revision of minimum wage rate and higher cost of skilled labor.

Other income deteriorated by 74.40 percent in 9MFY26 due to exchange loss worth Rs.163.356 million incurred during the period versus exchange gain of Rs.6.29 million recognized in the comparative period of last year.

Thinner gain on the revaluation of short-term investments, lower profit on bank deposits, no management fee income and petite sale of content and festival revenue also squeezed HUMNL’s other income in 9MFY26.

HUMNL posted 48.19 percent decline in its operating profit in 9MFY26 with OP margin clocking in at 19.58 percent versus OP margin of 33 percent recorded in 9MFY25. Finance cost escalated by 84.41 percent in 9MFY26 as the company acquired short-term loan worth Rs.1412.35 million From Tower Sports (Private) Limited, a subsidiary company.

HUMNL registered net profit of Rs.1146.25 million in 9MFY26, down 39.26 percent year-on-year. This translated into EPS of Rs.1.01 and NP margin of 20.64 percent in 9MFY26 as against EPS of Rs.1.66 and NP margin of 29.67 percent recorded in 9MFY25.

Future Outlook

With continuous diversification of revenue streams and cost optimization, HUMNL is well poised to face the future with vigor. Besides, the company is embracing new technologies to keep up with the challenges of the fast paced media industry and meet the evolving demand of the wider audiences.

The company is expanding its digital footprint to stay aligned with the customers’ changing preferences.