Azgard Nine Limited (PSX: ANL) was incorporated as “Indigo Denim Mills Limited” as a public limited company in Pakistan in 1993. The company is a textile composite unit engaged in the manufacturing and sale of yarn, denim and denim products.
Pattern of Shareholding
As of June 30, 2025, ANL has 485.410 million shares held by 6000 shareholders. Local general public has the majority stake of 30.42 percent in the company followed by Directors, CEO, their spouse and minor children holding 29.25 percent shares.
Associated companies, undertakings and related parties account for 24.96 percent of the company’s shares followed by joint stock companies holding 13.79 percent of ANL’s shares.
Insurance companies hold 1.47 percent shares of ANL. The remaining shares are held by other categories of shareholders.
Historical Performance (2019-2025)
Barring year-on-year decline in 2020 and 2023, ANL recorded a sizeable growth in its net revenue during the period under consideration. The bottomline of ANL succumbed to economic downturn in 2020 and resulted in net loss.
In 2021, the bottomline posted the highest year-on-year growth and attained its optimum level. 2022 shows a distinct pattern whereby the company attained the highest revenue growth, but bottomline didn’t follow the suit and dropped drastically.
ANL’s bottomline staggeringly rebounded in 2023 followed by a plunge in 2024. In 2025, ANL’s bottomline slightly ticked up.
The company’s margins which registered reasonable growth in 2019 nosedived in 2020. In 2021, gross margin dipped, however, operating and net margins recovered. 2022 saw erosion of ANL’s margins followed by a rebound in 2023. In 2024, all the margins eroded.
In 2025, gross and net margins receded while operating margin ticked up. The detailed performance review of the period under consideration is given below.
In 2019, ANL registered 26.48 percent year-on-year rise in its topline which clocked in at Rs.20,214.97 million. This was on the back of 41 percent improvement in the sales of spinning division and 39.4 percent increase in the sales of garment division.
Weaving division also posted 6.4 percent rise in 2019. Both export and local sales posted tremendous growth of 28 percent and 58 percent respectively in 2019.
Depreciation in the value of Pak Rupee also proved to be a boon for the export sales of the company and resulted in healthy GP margin of 17.26 percent in 2019 versus GP margin of 16.21 percent posted in the previous year.
In absolute terms, gross profit enlarged by 34.63 percent year-on-year in 2019. Selling & distribution expense inflated by 35.12 percent year-on-year in 2019 which was the consequence of higher payroll expense, freight, advertising & marketing expense as well as commission incurred during the year. Administrative expense posted a marginal 3.94 percent uptick in 2019 which was primarily due to higher payroll expense.
ANL expanded its workforce from 5992 employees in 2018 to 6763 employees in 2019 as the company undertook BMR in its garment division which resulted in better capacity utilization. 43.16 percent lower other income recorded by the company in 2019 was because the company didn’t book any reversal of provision for trade debt as it did last year.
Other expense mounted by 283.23 percent in 2019 on account of profit related provisioning and deficit on revaluation of assets. Operating profit enlarged by 39.65 percent year-on-year in 2019 with OP margin marching up to 10.04 percent from OP margin of 9.09 percent in the previous year. Exchange loss on foreign currency borrowings, higher discount rate coupled with increased borrowings translated into 32.41 percent higher finance cost recorded by ANL in 2019.
Net profit grew by 55.28 percent year-on-year in 2019 to clock in at Rs.305.32 million with EPS of Rs.0.67 versus EPS of Rs.0.43 recorded in 2018. NP margin also improved from 1.23 percent in 2018 to 1.51 percent in 2019.
In 2020, the topline of ANL plunged by 16.35 percent year-on-year to clock in at Rs.16,909.30 million. This was because the major customers of the company either cancelled or delayed their orders due to lockdown imposed by the government owing to the spread-out of the global pandemic.
The export sales of the company took a hit and shrank by 14 percent year-on-year to clock in at Rs. 15,547 million while local sales also plunged by 33 percent year-on-year to clock in at Rs.1047 million.
ANL also operated on a curtailed capacity which enabled it to reduce its cost of sales; however, GP margin dropped to 14.56 percent in 2020 due to high volatility in raw material prices, Pak Rupee depreciation and supply chain disruptions on the back of COVID-19.
The company tried to keep its operating expenses in check. Distribution expense slid by 2.9 percent year-on-year in 2020 due to lower freight expenses. Administrative expense posted a meager uptick of 7 percent in 2020 on the back of higher payroll expense despite the fact that the number of employees was reduced from 6973 in 2019 to 5605 in 2020.
Other income performed exceptionally well due to lucrative return on bank deposits, yet operating profit slipped by 43.15 percent year-on-year in 2020 with OP margin sliding down to 6.82 percent in 2020.
Finance cost also dropped by 16 percent year-on-year mainly on account of a massive plunge in the exchange loss on foreign currency borrowings.
The interest/markup expense kept growing during the year due to increased short-term and long-term borrowings and high discount rate in the first three quarters of FY20. ANL posted net loss of Rs.389.45 million with loss per share of Rs.0.84 in 2020.
As the economy entered the phase of nascent recovery in 2021, ANL made the most of it and was able to attain 30.52 percent year-on-year growth in topline which clocked in at Rs.22,070.23 million. This was the result of 24 percent year-on-year growth in export sales and 93 percent year-on-year growth in local sales to clock in at Rs.19,377 million and Rs. 2,017 million respectively.
However, high prices of raw materials such as cotton, yarn and fabric resulted in a slightly lesser GP margin of 14.45 percent in 2021 despite 29.5 percent rise in gross profit in absolute terms.
Another factor which affected the gross margin of the company was the stability in the value of Pak Rupee against the greenback which resulted in lesser translation gain. Distribution expense inched up by 10.53 percent in 2021 on account of higher freight and commission.
Administrative expense also rose by 10.89 percent during the year as a result of higher utility charges and elevated payroll expense as ANL’s workforce expanded to 6889 employees in 2021. Other expense took a massive jump of 526.41 percent in 2021 due to increase in provisioning done against trade receivables, WPPF and impairment loss on investments.
ANL registered 40.27 percent escalation in its operating profit in 2021 with OP margin slightly rising up to 7.33 percent. Finance cost buttressed the bottomline as it slid by 29.18 percent in 2021 due to low discount rate during the year coupled with exchange gain on foreign currency borrowings as against exchange loss recorded in the previous year.
The major shift to the bottomline came on the back of debt restructuring during the year which enabled the company to book gain worth Rs.7062.85 million which not only improved the equity of the company but also resulted in the highest ever bottomline seen by the company. ANL posted net profit of Rs.7559.40 million with EPS of Rs.15.38 and NP margin of 34.25 percent in 2021.
In 2022, the company attained the highest year-on-year growth of 53 percent in its topline which clocked in at Rs.33,768.79 million. Export sales were the major growth propeller which grew by 62 percent year-on-year to clock in at Rs.31,480 million. Local sales showed a marginal uptick of 3.2 percent year-on-year in 2022 to clock in at Rs.2083 million.
Despite handsome sales growth, the margins remained under pressure owing to a significant increase in energy tariffs and prices of gas and other raw materials. Gross profit rebounded by 46 percent year-on-year in 2022, however, GP margin dropped to 13.79 percent.
High freight charges and commission exacerbated the distribution expense which surged by 81.39 percent in 2022. Administrative expense also soared by 20.77 percent in 2022 as a result of higher payroll expense as number of employees increased to 7110 in 2022. Higher travelling, conveyance and entertainment also contributed in inflating the administrative expense in 2022. ANL operating profit rose by 30.34 percent in 2022; however its OP margin slid to 6.25 percent.
Financial restructuring greatly reduced the debt burden and hence the finance cost of the company shrank by 15.87 percent in 2022.
However, lower gain on the restructuring loan in 2022 when compared to 2021 considerably affected the bottomline. This coupled with the amortization of notional income resulted in 90.83 percent year-on-year erosion in ANL’s net profit in 2022 which clocked in at Rs.693.05 million with EPS of Rs.1.41 and NP margin of 2.05 percent.
ANL’s topline dropped by 6.51 percent year-on-year to clock in at Rs. 31,571.12 million in 2023. This was because the demand for textiles experienced a massive slowdown during the period due to recession and slowdown of economic activity both locally and internationally.
During the year the company faced myriad challenges such as high raw material prices, energy tariff, devastating floods which resulted in lower crop yields. Its export sales dipped by 8 percent in 2023 while local sales grew by 14 percent. However, depreciation in the value of local currency helped company attain a better GP margin of 16.11 in 2023 with gross profit having grown by 9.21 percent.
ANL registered 24.90 percent dip in its distribution expense in 2023 which was due to significantly lesser commission and freight expense incurred during the year. Administrative expense surged by 15 percent in 2023 on account of higher payroll expense, travelling & conveyance, repair & maintenance, fuel and power as well as fuel & power charges coupled with depreciation.
Other income amplified by 353.44 percent in 2023 mainly on the back of higher profit on saving deposits. This greatly helped ANL’s operating profit to grow by 47.3 percent in 2023 with OP margin climbing up to 9.84 percent. 6.6 percent higher finance cost was the result of higher discount rate. ANL’s net profit grew by 112.17 percent to clock in at Rs.1470.45 million in 2023 with EPS of Rs.2.99 and NP margin of 4.66 percent.
In 2024, ANL posted 15.67 percent year-on-year growth in its topline which clocked in at Rs.36,517.18 million. This came on the back of 19 percent year-on-year growth in export sales. Conversely, local sales slid by 14 percent in 2024 due to lackluster demand on the back of subdued macroeconomic backdrop.
Cost of sales mounted by 20.58 percent in 2024 due to increased raw material prices and elevated energy cost. This resulted in 9.90 percent decline in gross profit with GP margin falling down to 12.55 percent.
Distribution expense mounted by 42.49 percent in 2024 due to a spike in sea freight cost on account of attacks on commercial ships passing through the lower Red Sea by the Houthi rebels in Yemen.
Moreover, increase in advertising & promotion budget, salaries & wages of sales force as well as travelling & conveyance charges also contributed in driving up the distribution expense in 2024. Administrative expense ticked up by 7.49 percent in 2024 due to higher payroll expense as number of employees increased from 6190 in 2023 to 8082 in 2024.
Other income strengthened by 163 percent in 2024 due to hefty return on mutual funds and bank deposits as well as sizeable export rebate and subsidies received during the year. Other expense slid by 24.83 percent in 2024 due to lesser provisioning done for WPPF. The company also booked impairment of Rs.69.91 million on ECL in 2024.
All these factors translated into 21.91 percent diminution in operating profit with OP margin ticking down to 6.65 percent.
Finance cost escalated by 34 percent in 2024 due to higher discount rate and increased utilization of working capital lines. Gearing ratio was recorded at 29.48 percent in 2024 versus 30.66 percent in 2023.
Amortization expense fell by 56.17 percent in 2024. Net profit slumped by 54 percent to clock in at Rs. 675.32 million in 2024. This translated into EPS of Rs.1.37 and NP margin of 1.85 percent.
In 2025, ANL posted 11.19 percent year-on-year growth in its topline which clocked in at Rs.40,605.01 million. This was due to gradual demand recovery on account of muted inflationary pressure. Both local and export sales progressed during the year.
Higher energy cost and raw material prices exerted pressure on the company’s margins which was further exacerbated by geopolitical tension in the Middle Eastern region. GP margin inched down to its lowest level of 12.26 percent in 2025. This was despite 8.64 percent year-on-year growth in gross profit recorded in absolute terms.
Distribution expense plunged by 2.52 percent in 2025 due to containment of advertising budget, lesser freight charges, lower sales commission as well as a decline in travelling and conveyance expense recorded during the year. Increase in minimum wage rate as well as workforce expansion from 8082 employees in 2024 to 8310 employees in 2025 pushed up administrative expense by 9.95 percent in 2025.
Other income ticked up by 5.54 percent in 2025 as lower dividend income and interest income was offset by higher export rebate and subsidies as well as foreign exchange gain. 59.79 percent spike in other expense registered in 2025 was the result of increased provisioning done for WWF and WPPF.
The company recorded reversal of Rs.53.86 million against ECL in 2025 as against impairment booked in the previous year. ANL posted 19.56 percent growth in its operating profit in 2025 with OP margin ticking up to 7.15 percent. Finance cost multiplied by 3.65 percent in 2025 due to delays in government funds which tightened the liquidity position of the company.
The release of funds from the buyer of the Muzaffargarh plant also tightened the liquidity of the company in 2025. Amortization of transaction cost and higher bank charges also played their role in pushing up the finance cost in 2025.
Gearing ratio was recorded at 27.36 percent in 2025. Notional interest expense multiplied by 91 percent in 2025. During the year, the Government of Pakistan shifted exporters from Final Tax Regime to Normal Tax regime and also introduced 1 percent additional advance minimum tax on export proceeds which was in addition to the already existing 1 percent tax on export proceeds.
Super tax also pushed up tax expense for the year. All these factors translated into a marginal 3.92 percent growth in ANL’s bottomline which clocked in at Rs.701.802 million in 2025. This translated into EPS of Rs.1.43 and NP margin of 1.73 percent in 2025.
During the year, the company also got the settlement plan of the outstanding preference shares approved by the shareholders and paid the outstanding dividends accordingly.
Recent Performance (1QFY26)
During the first quarter of the ongoing fiscal year, ANL recorded 6.69 percent decline in its net sales which clocked in at Rs.9422.18 million. Energy cost and raw material prices exceeding global benchmark, tariff pressure, and transition to normal tax regime and stockpiling sales tax refunds continued to take its toll on the competiveness of the local textile players.
Gross profit deteriorated by 9.98 percent in 1QFY26 with GP margin falling down to 11.39 percent versus GP margin of 11.81 percent recorded in 1QFY25. Lower sales volume resulted in 33.21 percent decline in distribution expense in 1QFY26. Conversely, administrative expense mounted by 22.83 percent during the period due to increase in minimum wage rate from Rs.37000 to Rs.40,000.
Other expense mounted by 234.54 percent in 1QFY26 apparently due to higher profit related provisioning and exchange loss recorded done during the period. Other income stayed largely intact in 1QFY26.
The company also booked impairment loss of Rs.10.94 million for ECL in 1QFY26. Operating profit slid by 4.47 percent in 1QFY26, however, OP margin slightly improved from 5.66 percent in 1QFY25 to 5.80 percent in 1QFY26.
Finance cost shrank by 34.43 percent in 1QFY256 due to monetary easing. Bank discounting and charges also contracted during the period. ANL recorded net profit of Rs.114.617 million in 1QFY26, up 69 percent year-on-year. This translated into EPS of Rs.0.23 versus EPS of Rs.0.14 recorded in 1QFY25. NP margin also rebounded from 0.67 in 1QFY25 to 1.22 percent in 1QFY26.
Future Outlook
Lower inflation, discount rate and stable local currency also support the business setting. Conversely, regional conflicts and elevated energy cost are the downside risks for the company.
ANL is focusing on attaining operational efficiency through process automation, investment in renewable energy and better procurement and production planning.
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