Octopus Digital Limited (PSX: OCTOPUS) was incorporated in Pakistan as a private limited company in 2017 as Avanceon Digital (Private) Limited. The company changed its name to Octopus Digital (Private) Limited in 2019. It was converted into a public limited company in 2020. OCTOPUS is a wholly owned subsidiary of Avanceon Limited.
The company is engaged in carrying out IT enabled services which involves information storage, online assessment and monitoring of employee performance, online screening of cost and production efficiency, online plant and machinery maintenance as well as selling and trading of relevant software and equipments.
Pattern of Shareholding
As of December 31, 2025, OCTOPUS has a total of 157.263 million shares outstanding which are held by 8479 shareholders. Avanceon Limited is the largest shareholder of OCTOPUS with a stake of 74.32 percent in the company followed local general public holding 22.88 percent shares of OCTOPUS. The remaining shares are held by other categories of shareholders.
Historical Performance (2020-25)
Except for a decline in 2024 and 2025, OCTOPUS’s topline and bottomline followed an upward trajectory over the period under consideration. A sneak into the margins of the company shows that the gross margin followed a persistent downward trajectory in 2021 and 2022 followed by an uptick in 2023. Conversely, operating and net margins registered significant plunge in 2021 followed by a recovery in 2022. Both the margins registered a downtick in 2023. In 2024, all the margins drastically followed by a rebound in 2025. The detailed performance review of the period under consideration is given below.
In 2020, OCTOPUS’s topline multiplied by 1401.45 percent to clock in at Rs.277.11 million. This was the year when the company entered into a contract with Avanceon Limited (the holding company) under which OCTOPUS acquired the After Market Support (AMS) segment of Avanceon by issuing 108.4 million ordinary shares of the company at a face value of Rs.10 per share. In the same year, OCTOPUS also changed its status from being private limited company to public limited company. The spike in sales revenue was the result of AMS segment’s revenue worth Rs.241.242 million transferred to OCTOPUS by Avanceon after deducting an administrative fee. OCTOPUS didn’t incur any cost of sales in 2019; however, the same grew to Rs.7.75 million in 2020 mainly on account of materials consumed during the year. This translated into GP margin of 97.20 percent in 2020. Operating expense grew by 12.34 percent year-on-year in 2020 primarily due to higher payroll expense as the number of employees increased from 4 in 2019 to 21 in 2020. Operating profit grew by 5336.76 percent in 2020 with OP margin of 91.57 percent versus OP margin of 25.3 percent recorded in 2019. With 0 percent debt-to-equity ratio, the company didn’t have any finance cost on its books. Net profit grew by 8874.13 percent in 2020 to clock in at Rs.219.74 million with NP margin of 79.30 percent versus NP margin of 13.27 percent recorded in 2019. EPS shrank by 17.96 percent year-on-year in 2020 to clock in at Rs.2.01 due to issuance of shares during the year.
In 2021, OCTOPUS’s topline grew by 125.61 percent year-on-year to clock in at Rs.625.20 million. This was mainly led by 11.16 times rise in export sales during the year. Local sales and services also multiplied by 2.3 times in 2021. Cost of sales grew by 1860 percent in 2021 primarily on the back of installation and travelling charges incurred related to engineering services coupled with materials consumed during the year and back office support provided by the holding company. This translated into 75.68 percent escalation in gross profit in 2021, however, GP margin slumped to 75.69 percent. Operating expense grew by 705.46 in 2021 mainly due to massive allowance worth Rs.58.068 million booked against ECL. During 2021, OCTOPUS also recognized exchange gain and profit of TDR, translating into other income of Rs.11.14 million. Operating profit grew by 42 percent year-on-year in 2021 with OP margin slipping to 57.65 percent. Net profit registered 57.44 percent year-on-year growth in 2021 to clock in at Rs.345.95 million with NP margin of 55.33 percent and EPS of Rs.2.53.
In 2022, OCTOPUS’s topline posted 9.89 percent year-on-year growth to clock in at Rs.687.01 million. Due to import restrictions, the company AMS’s revenue particularly to spare and material oriented projects remained low during the year. Cost of sales grew by a steep 103.59 percent due to Pak Rupee depreciation and high inflation. Gross profit slipped by 20.21 percent year-on-year in 2022 with GP margin narrowing down to 54.96 percent. Operating expense grew by 64.50 percent year-on-year mainly on account of elevated payroll expense as the number of employees grew from 27 in 2021 to 46 in 2022. Management fee, bank charges and allowance for ECL also significantly grew in 2022. Operating results were greatly buttressed by a massive 2202.94 percent spike in other income in 2022 which was the consequence of exchange gain on its foreign sales as well as mark-up income from the parent company. Operating profit grew by 19.34 percent year-on-year in 2022 and OP margin also rebounded to clock in at 62.61 percent in 2022. Net profit rose by 17 percent year-on-year in 2022 to clock in at Rs.405.063 million with NP margin of 58.96 percent and EPS of Rs.2.74.
In 2023, OCTOPUS’s net sales rose by 31.46 percent to clock in at Rs.903.118 million. This was mainly on account of revenue from export sales and AMS business services rendered during the year. Cost of sales hiked by 28 percent year-on-year in 2023 primarily on the back of elevated installation charges related to engineering services. Hefty export sales resulted in 34.26 percent year-on-year rise in gross profit in 2023 with GP margin inching up to 56.13 percent. OCTOPUS registered 31.47 percent higher operating expense in 2023 which was due to increased payroll expense as the company enhanced its workforce to 85 employees, up from 57 employees in the previous year. Allowance for ECL pertaining to related parties as well as legal & professional charges also surged during the year, making significant contribution to higher operating expense in 2023. Other income mounted by 29.80 percent in 2023 on account of robust exchange gain recorded during the year as well as elevated mark-up income recognized from related parties. OCTOPUS’s operating profit improved by 21.97 percent in 2023, however, OP margin ticked down to 58.10 percent due to elevated operating expense. During the year, OCTOPUS obtained long-term loan of Rs.14.418 million which resulted in finance cost of Rs.1.63 million. Net profit improved by 27.34 percent year-on-year in 2023 to clock in at Rs.515.808 million with EPS of Rs.3.45 and NP margin of 57.11 percent.
In 2024, OCTOPUS’s net sales dipped by 5.80 percent to clock in at Rs.850.729 million. This was on account of a diminution recorded in export sales due to stability in the value of Pak Rupee. Cost of sales surged by 19 percent in 2024 due to increase in the prices of material consumed during the year coupled with hefty payroll expense as well as fee & subscription charges incurred during the year. This resulted in 25.22 percent decline recorded in gross profit in 2024 with GP margin inching down to 44.56 percent. Operating expense dipped by 0.50 percent in 2024 on account of lower back office support charges by the Parent company to share office premises, operational, human resource and administrative support. Legal & professional charges also considerably shrank during the year. However, it was greatly offset by higher payroll expense incurred during the year as the number of employees increased from 85 in 2023 to 91 in 2024. Other expense mounted by 51.51 percent in 2024 due to exchange loss and current account expense (mark-up) incurred during the year. Other income slumped by 80.78 percent in 2024 due to high-base effect as the company recognized hefty exchange gain in the previous year. OCTOPUS recorded 80 percent thinner operating profit in 2024 with OP margin falling down to its lowest level of 12.31 percent. Finance cost grew by 117.55 percent in 2024 due to higher discount rate as well as an uptick recorded in the company’s outstanding debt. Gearing ratio was recorded at 0.31 percent in 2024. Although the company obtained external financing in the previous year, however, it was not geared due to excessive cash & bank balances. OCTOPUS’s net profit dwindled by 82 percent to clock in at Rs.92.437 million in 2024. This translated into EPS of Rs.0.58 and NP margin of 10.87 percent in 2024.
In 2025, OCTOPUS’s net sales further slid by 40.61 percent to clock in at Rs.505.225 million. This was due to drastic decline in export sales in 2025 which was the result of realignment of the international structure of the company. Until last year, the revenue recognized from all the international projects was executed in Pakistan because the group didn’t have any corporate presence in the ME region. However, in 2025, as a part of streamlining of its operations, the revenue from the international projects was executed to the group entity Octopus Digital FZ LLC, a wholly owned subsidiary in UAE. As a result, the standalone financial statement for 2025 represented drastic decline in net revenue. Cost of sales also fell by 44.92 percent in 2025 due to the reason explained above. This resulted in 35.25 percent decline in gross profit in 2025. However, GP margin improved to 48.58 percent in 2025. Operating expense fell by 28.35 percent in 2025 which was also because of the structural changes undertaken by the company. Number of employees was reduced from 91 in 2024 to 87 in 2025. Other income mounted by 107.26 percent to clock in at Rs.132.70 million in 2025 due to mark-up from related parties as well as exchange gain. Conversely, other expense slid by 9.92 percent in 2025 as no exchange loss was recorded during the year which overshadowed the impact of increased allowance booked for ECL. OCTOPUS recorded 16.93 percent improvement in its operating profit in 2025 with OP margin jumping up to 24.23 percent. Finance cost surged by 15.35 percent to clock in at Rs.4.08 million in 2025 due to increase in outstanding liabilities (diminishing Musharaka Finance). The company posted net profit of Rs.86.708 million in 2025, down 6.20 percent year-on-year. This translated into EPS of Rs.0.54 and a stronger NP margin of 17.16 percent in 2025.
Recent Performance (1HCY26)
During the first half of CY26, OCTOPUS recorded an uptick of 5.15 percent in its net sales which clocked in at Rs.188.67 million. This was because the decent growth recorded in revenue from local sales and services was greatly offset by weaker export sales.
Increased order generation, technology enhancement to incorporate AI enabled solutions in its offerings, inflationary pressure and the induction of skilled labor resulted in 6.82 percent spike in cost of sales in 1HCY26.
Gross profit ticked up by 3.45 percent in 1HCY26 with GP margin inching down to 48.94 percent from 49.74 percent in 1HCY25. Enhancement of operations and inflationary pressure resulted in 9.25 percent uptick in administrative expense in 1HCY26.
Other expense mounted by 54.76 percent in 1HCY26 likely due to greater allowance booked for ECL and exchange loss recorded during the period. Other expense was completely offset by other income of Rs.59.09 million recognized in 1HCY26, up 12 percent year-on-year.
This was likely due to increased mark-up income. OCTOPUS’s operating loss mounted by 653 percent to clock in at Rs.13.426 million in 1HCY26. Increased bank charges appear to be the cause of 5.39 percent higher finance cost recorded in 1HCY26.
The company posted net loss of Rs.30.966 million in 1HCY26, up 240.81 percent year-on-year. This translated into loss per share of Rs.0.20 in 1HCY26 versus loss per share of Rs.0.06 recorded in 1HCY25.
Future Outlook
OCTOPUS is banking on its digitalization business which is making greater strides in the Middle East, US and many other parts of the world. OCTOPUS is constantly expanding its footprint in diverse geographical markets to offset the impact of sluggish business in the home market.
The company is also expanding its digital and aftermarket support (AMS) business in KSA, besides enhancing its presence in the US and European markets to make the most of the region’s thriving business environment. However, in the local market, the company’s performance is marred by rising operational cost and tax burden which is squeezing its margins and profitability.
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