Emco Industries Limited (PSX: EMCO) was incorporated in Pakistan as a joint stock company in as a joint stock company in 1954. Initially the company was known as Electric Equipment Manufacturing Company (Private) Limited. It was converted into a public limited company in 1983 and changed its name to EMCO Industries Limited in the same year. The principal activity of the company is the manufacturing and sale of high/low tension electrical porcelain insulators and switchgears.
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.
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