Habib Rice Products Limited

Habib Rice Products Limited (PSX: HRPL) was incorporated in Pakistan in 1980. The principal activity of the company is the production of rice based starch sugar and proteins.

Pattern of Shareholding

As of June 30, 2025, HRPL has a total of 40 million shares outstanding which are held by 2279 shareholders. Directors, CEO, their spouse and minor children have the majority stake of 64.81 percent in the company, followed by individuals holding 18.79 percent shares.

Associated companies, undertaking and related parties account for 14.56 percent shares of HRPL. The remaining ownership is distributed among other categories of shareholders.

Historical Performance (2019-25)

HRPL’s topline rode an upward trajectory until 2023 followed by a dip in 2024 and 2025. Its bottomline slid in 2022, 2024 and 2025. In 2024 and 2025, the company registered operating and net losses. HRPL’s margins went uphill until 2021 followed by a sizeable drop in 2022.

In the subsequent year, the margins considerably rebounded. In 2024 and 2025, HRPL’s margins deteriorated and posted their lowest level in 2025. The detailed performance review of the period under consideration is given below.

In 2019, HRPL’s topline grew by 9.27 percent year-on-year to clock in at Rs.1562.70 million. While local sales slumped on account of dumping of sorbitol from India, robust demand of the company’s products in the export market drove the net sales up. The share of export sales in HRPL’s net sales grew from 13 percent in 2018 to 30 percent in 2019.

Gross profit rebounded by a massive 46.58 percent year-on-year in 2019 as export sales provided healthy margins amid Pak Rupee depreciation. GP margin grew from 14.53 percent in 2018 to 19.49 percent in 2019. Higher export volumes also resulted in elevated freight and commission charges, culminating into 28.67 percent spike in distribution charges in 2019.

Administrative expense also inched up by 6.70 percent year-on-year in 2019 on account of higher payroll expense incurred during the year. HRPL’s net other income rose by 55 percent year-on-year in 2019 due to higher profit on TDR and bank deposits as well as exchange gain.

Operating profit multiplied by 128.53 percent year-on-year in 2019 translating into OP margin of 9 percent, up from OP margin of 4.31 percent recorded in 2018. Finance cost surged by 160.82 percent year-on-year in 2019, however, it only comprised of bank charges and commissions as HRPL didn’t have any external borrowings on its books.

Net profit spiraled by 78.93 percent year-on-year in 2019 to clock in at Rs.123.25 million with EPS of Rs.3.08, up from EPS of Rs.1.72 recorded in 2018. NP margin also ascended from 4.82 percent in 2018 to 7.89 percent in 2019.

HRPL’s topline grew by 8.73 percent to clock in at Rs.1699.07 million in 2020. The outbreak of COVID-19 and the associated restrictions on the movement of goods and people across border resulted in a complete halt of sorbitol import from India. This created supply gap in the market, allowing the company to increase its prices.

HRPL’s export sales also slipped in 2020 on account of COVID-19, however, improved prices in the home market pushed the gross profit up by 24 percent year-on-year with GP margin picking up to 22.22 percent.

Distribution expense grew by 4.94 percent year-on-year in 2020 on the back of higher freight expense and advertisement expense. Higher payroll expense and depreciation on right-of-use assets drove up the administrative expense by 3.40 percent year-on-year in 2020.

Net other income rebounded by 30.94 percent year-on-year in 2020 on account of splendid interest income on short-term investment. As a consequence, operating profit widened by 50.88 percent year-on-year in 2020 with OP margin jumping up to 12.51 percent.

Finance cost surged by 34.30 percent year-on-year in 2020 due to accretion of interest on lease liabilities. Net profit rose by 41.60 percent year-on-year in 2020 to clock in at Rs.174.52 million, translating into EPS of Rs.4.36 and NP margin of 10.27 percent.

In 2021, HRPL’s topline posted a marginal 4.31 percent year-on-year growth to clock in at Rs. 1772.26 million. This was due to lower sales volume as imports from India resumed during the year. However, better margins on export sales saved HRPL’s topline from falling.

Gross profit picked up by 12.19 percent year-on-year in 2021 on account of higher margins on export sales. GP margin jumped up to 23.90 percent in 2021. Administrative expense largely stayed at the same level as of 2020.

Conversely, distribution expense magnified by 25.95 percent year-on-year in 2021 as freight charges soared due to higher export sales.

Net other income shrank by 12.61 percent year-on-year in 2021 due to lower profit on saving accounts and deposit receipts on account of monetary easing during the year. However, gain on the re-measurement of GIDC worth Rs.28.37 million buttressed the operating performance of HRPL in 2021.Operating profit picked up by 23.15 percent year-on-year in 2021 with OP margin rising up to 14.77 percent.

Finance cost multiplied by 156 percent year-on-year in 2021 due to unwinding of finance cost on provision for GIDC. Tax expense narrowed down by 94.96 percent year-on-year in 2021 on account of tax credit from prior year. This resulted in 43.26 percent year-on-year growth in net profit which clocked in at Rs.250.02 million with EPS of Rs.6.25 and NP margin of 14.11 percent.

HRPL’s net sales grew by 8.32 percent year-on-year to clock in at Rs.1919.66 million in 2022. The non-availability of energy during the year resulted in curtailed plant operations which culminated into lower sales volume.

Topline growth was primarily the result of higher export sales which constituted 33.5 percent of HRPL’s cumulative net sales in 2022 versus its share of 16 percent recorded in 2021. High cost of energy coupled with unparalleled level of inflation pumped up the cost of sales by 9.50 percent year-on-year in 2022.

Gross profit grew by 4.55 percent year-on-year in 2022, however, GP margin slightly tumbled to 23.10 percent. Distribution expense surged by 87.66 percent year-on-year in 2022 on account of higher freight charges which was primarily the effect of elevated prices of POL products.

Administrative expense also multiplied by 18.22 percent year-on-year in 2022 due to higher payroll expense as well as travelling & conveyance charges. Net other income tapered off by 44.28 percent year-on-year in 2022 due to higher unrealized loss on listed equity securities and lower profit on TDRs.

Resultantly, operating profit shrank by 47.21 percent year-on-year in 2022 with OP margin falling down to 7.20 percent. To make things even worse, finance cost soared by 62.22 percent year-on-year in 2023 on account if higher unwinding of finance cost on provision for GIDC.

Net profit contracted by 66.37 percent year-on-year in 2022 to clock in at Rs.84.08 million with EPS of Rs.2.10 and NP margin of 4.38 percent.

Among all the years under consideration, HRPL posted the highest year-on-year growth of 32 percent in its topline in 2023. This resulted in net sales of Rs.2534.02 million in 2023. Import restrictions forced the company to locally source its raw materials.

Supply chain disruptions coupled with erratic gas supplies didn’t allow the company to operate at its optimum capacity. Hence, it liquidated its long accumulated inventory in 2023. Cost of sales grew by 29.20 percent year-on-year in 2023 resulting in 41.36 percent higher gross profit and GP margin touching its highest level of 24.71 percent in 2023.

Distribution and administrative expenses declined by 30.44 percent and 2.60 percent respectively in 2023 due to lower freight charges and payroll expense respectively. Net other income further slid by 0.55 percent due to higher provisioning done for WWF and WPPF in 2023. Gain on re-measurement of GIDC grew by 23.95 percent to clock in at Rs.10.59 million which buttressed the operating results in 2023.

As a result, operating profit posted a staggering 180.62 percent rise in 2023 with OP margin climbing up to 15.30 percent. Finance cost grew by 8.71 percent year-on-year in 2023 due to higher unwinding of finance cost on provision for GIDC.

Net profit showed a massive improvement of 296.11 percent year-on-year in 2023 to clock in at Rs.333.06 million with NP margin of 13.14 percent and EPS of Rs.8.33.

In 2024, HRPL’s net sales dropped by 7.64 percent year-on-year to clock in at Rs.2340.41 million.

During the year, India imposed a ban on its rice export which drove the international prices quite up. In order to take advantage of the opportunity, Pakistani farmers quickly harvested the crop which still had moisture. To avoid fungal infection, the farmers used fungicide and held down alfatoxin which made the local crop non-organic and hence un-exportable.

Resultantly, the local market was flooded with cheap soybean meal. This rendered HRPL’s protein unattractive, leaving behind unsold piles of inventory.

Cost of sales mounted by 12.69 percent in 2024 due to higher prices of raw & packaging material consumed during the year coupled with elevated utility charges. The unavailability of natural gas forced the company to continue its operations using expensive furnace oil and KE power. This resulted in 69.59 percent decline in gross profit in 2024 with GP margin falling down to 8.13 percent.

Distribution expense mounted by 17.47 percent in 2024 due to hefty advertisement & promotion budget coupled with higher travelling & conveyance charges incurred during the year. Administrative expense multiplied by 13.54 percent in 2024 due to higher payroll expense as a result of inflationary pressure.

The company squeezed its workforce from 320 employees in 2023 to 307 employees in 2024.

Net other income posted a tremendous growth of 489.75 percent in 2024 as unlike last year; the company didn’t book any provisioning for WWF and WPPF and also didn’t incur any unrealized loss on re-measurement of its investments at FVTPL.

Moreover, other income strengthened on the back of reversal of provision booked for WWF, gain recognized on the disposal of investments as well as higher profit recognized on bank deposits. Despite handsome other income, HRPL posted operating loss of Rs.36.29 million in 2024.

Finance cost inched up by 1.35 percent in 2024 due to higher bank charges & commission incurred during the year. Conversely, unwinding of finance cost on provision for GIDC which formed the largest proportion of HRPL’s finance cost, ticked down during the year. The company posted net loss of Rs.92.43 million in 2024 with loss per share of Rs.2.31.

2025 didn’t turn favorable for HRPL, as evident by 8.72 percent slippage in its topline which clocked in at Rs.2136.28 million.

The impact of superfluous supply of imported sorbitol in the local market negatively impacted the company’s business during the year.

While domestically produced alternatives were subject to 18 percent sales tax, imported sorbitol was subject to 1 percent tax, making it more lucrative for the customers.

Not only did the imported sorbitol rob the company’s share in the local market, it also led to thinner export sales in 2025.

High energy cost remained one of the pressing issues for the company; however, it couldn’t be passed on to the customers because of cheaper competitive products in the market. HRPL’s gross profit slumped by 10.72 percent in 2025 with GP margin sliding down to its lowest level of 7.96 percent.

Petite GP margin was the consequence of thinner sales volume, higher utility charges and lower export margins due to stability of local Rupee. Moreover, the Baluchistan government imposed a market committee fee on the company’s products which also inflated its overall cost.

Besides, the unjust allocation of water from Hub dam compelled the company to purchase water from private suppliers at exorbitant rates which also drove up its cost. Curtailed advertising & promotion budget resulted in 2.61 percent dip in HRPL’s distribution expense in 2025.

Conversely, administrative expense ticked up by 2.34 percent in 2025 owing to Sharjah subsidiary expense which were pre-commencement expense related to the setting up of a wholly owned subsidiary in Sharjah.

However, the subsidiary was later liquidated. Other expense mounted by 202.36 percent in 2025 on account of exchange loss. Other income massively declined to the tune of 76.76 percent in 2025. This was due to thinner profit on investments and no gain recognized on the disposal of investments in 2025. HRPL’s operating loss magnified by 218.57 percent to clock in at Rs.115.59 million in 2025.

Finance cost tumbled by 58 percent in 2025 due to lesser unwinding of finance cost on provision for GIDC. In 2025, HRPL acquired long-term loan of Rs. 38 million which translated into a gearing ratio of 5 percent in 2025 versus 0 percent until 2024.

The company recorded net loss of Rs.155.71 in 2025, up 68.46 percent year-on-year. This translated into loss per share of Rs.3.89 in 2025.

Recent Performance (1QFY26)

HRPL’s net sales which had been dwindling for the past two years, posted 11.54 percent improvement to clock in at Rs.497.96 million in 1QFY26. Improved demand from selected export markets and better outreach and customer retention in the local market were the key reasons for stronger net sales recorded in 1QFY26.

Higher sales coupled with the use of alternate energy and better water supply resulted in 854.50 percent growth in HRPL’s gross profit in 1QFY26 with GP margin clocking in at 8.80 percent versus GP margin of 1.03 percent recorded in 1QFY25.

Distribution expense ticked down by 10.50 percent in 1QFY26 probably due to lesser advertisement and promotion budget as the company largely focused on its key markets and loyal customers during the period.

Administrative expense also ticked down by 5.60 percent in 1QFY26 possibly because the company streamlined its workforce as it did in the previous year and also because it didn’t incur subsidiary fee during 1QFY26. Other income fell by 92.45 percent in 1QFY26 may be on account of thinner profit on investments due to monetary easing.

Other income was offset by other expense of Rs.0.73 million incurred during the period which appears to comprise of exchange loss. Operating loss tapered off by 78.37 percent in 1QFY26 to clock in at Rs.11.10 million.

Finance cost mounted by 144.16 percent in 1QFY26 as the company’s long-term and short-term financing considerably increased during the period. Net loss shrank by 68.14 percent to clock in at Rs.18.36 million in 1QFY26. This translated into loss per share of Rs.0.46 in 1QFY26 versus loss per share of Rs.1.44 recorded in 1QFY25.

Future Outlook

The international brown rice syrup market is staggeringly growing on account of consumers’ rising inclination towards organic sweeteners. HRPL must capitalize on this opportunity and focus on export sales to earn better margins.

The ease on rice exports by India will prove to be beneficial for the company as it will lower the international prices of its core raw material. HRPL being at the tail end of the gas pipeline suffer from inconsistent gas supply which impedes its production.

The company has initiated the establishment of co-generation power plant (also known as combined heat and power plant) as a substitute of gas to ensure uninterrupted production operations in order to enhance its sales volume.

On the flipside, the imposition of Market committee fee and the materialization of free trade agreement with China (which will reduce the duty on imported sorbitol from 3 percent to zero percent) will continue to be the Achilles heel for the company.