Pakistan’s 20 leading listed textile companies generated approximately $5 billion in sales during fiscal 2026, but lower borrowing costs and taxes drove profit growth.
Combined revenue reached Rs1.40 trillion in the year ended June 30, down 0.3 per cent from the previous year. However, net income increased 11.4 per cent to approximately Rs52 billion, compared with Rs46.7 billion a year earlier.
Topline Securities analyst Rabia Yousuf published the findings in an October 13 research report. The sample covers composite textile, spinning, weaving, woollen and apparel companies.
Together, these businesses represent approximately 83 per cent of the market capitalisation of the selected listed textile sector. Their results highlight improved earnings despite limited growth in core manufacturing activity.
Lower financing costs lift profits
Finance costs fell 19.2 per cent to Rs54.5 billion, compared with Rs67.4 billion in FY2025. That decline saved the companies approximately Rs12.9 billion.
Topline attributed the reduction primarily to lower financing rates and reduced borrowing under the Export Finance Scheme.
The companies’ effective tax rate also declined to 33.2 per cent from 37.1 per cent. Topline linked this mainly to deferred tax liability reversals following changes in exporters’ future super tax treatment.
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These changes helped manufacturers retain more earnings even though sales barely moved.
Meanwhile, gross profit slipped 0.2 per cent to Rs183.7 billion, against Rs184.1 billion a year earlier. The gross profit margin remained unchanged at 13.1 per cent.
The figures suggest that cheaper financing and tax adjustments contributed more to the earnings improvement than stronger production margins.
Interloop leads an uneven earnings recovery
Company-level results showed significant differences across the sample.
Interloop, Sapphire Textile Mills and Nishat Mills together contributed 48 per cent of total profits, according to Topline’s findings.
Interloop’s consolidated profit rose 129 per cent to Rs12.7 billion. Its sales increased 5 per cent to Rs187.7 billion.
Improved gross margins, lower finance costs and higher other income supported the company’s earnings.
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Sapphire Textile Mills recorded a 73 per cent increase in unconsolidated profit to Rs6.8 billion. However, its sales fell 13 per cent to Rs81.2 billion.
Higher other income, cheaper financing and a lower effective tax rate helped offset that decline.
Nishat Mills reported a different outcome. Its unconsolidated profit dropped 9 per cent to Rs5.5 billion, despite sales rising 2 per cent to Rs181.6 billion.
Lower dividend income and weaker gross margins weighed on its results.
Energy costs remain a challenge
Topline expects lower financing costs and FY2027 budget measures to support textile profitability.
Companies are also adopting renewable energy and cheaper energy sources to contain expenses. Nevertheless, high energy costs and intense international competition continue to constrain the industry.
The findings describe the listed-company sample, rather than every textile manufacturer in Pakistan. They show financial relief supporting earnings, while stagnant sales and unchanged gross margins point to continuing pressure on the underlying business.
