Pakistan’s top 20 listed textile companies recorded an 11% increase in combined profits to Rs51.9 billion in FY26, according to Topline Securities. Lower borrowing costs and a reduced effective tax rate lifted earnings despite nearly flat sales.
The companies generated revenue of Rs1.4 trillion, equivalent to around $5 billion. Together, they represent 83% of the market capitalisation of the selected listed textile sector.
The results show how financing and tax relief supported profitability while businesses struggled to expand revenue.
Lower finance costs and taxes lift earnings
Finance costs dropped 19% year-on-year to Rs54.5 billion. Topline attributed the decline mainly to lower financing rates and reduced borrowings under the Export Finance Scheme.
Meanwhile, the effective tax rate fell to 33.2% from 37.1% a year earlier. Companies reversed deferred tax liabilities following changes in the future super tax treatment of exporters, driving much of that reduction.
Read More: Pakistan Textile Exports Face Sharp Fall, Exporters Warn
However, operating performance showed little improvement. Sales slipped 0.3%, while gross profit declined 0.2%. Gross margins held steady at 13.1%, highlighting the limited contribution of core business growth to the earnings increase.
The distinction matters because lower interest and tax expenses can improve profits even when demand remains weak.
Interloop leads gains as Nishat earnings fall
Interloop, Sapphire Textile Mills and Nishat Mills collectively contributed 48% of the companies’ total earnings.
Interloop’s consolidated profit jumped 129% to Rs12.7 billion, making it the largest contributor. Sales increased 5% to Rs187.7 billion. Better gross margins, lower finance costs and a sharp rise in other income supported its performance.
Sapphire Textile Mills posted a 73% increase in unconsolidated profit to Rs6.8 billion. Its sales nevertheless fell 13% to Rs81.2 billion. Higher other income, cheaper financing and a lower effective tax rate helped offset the revenue decline.
In contrast, Nishat Mills’ unconsolidated profit dropped 9% to Rs5.5 billion. Lower dividend income and weaker gross margins weighed on earnings, although sales rose 2% to Rs181.6 billion.
Export figures differ as cost pressures persist
The supplied account of Topline’s analysis puts FY26 textile exports at $17.6 billion, up 2%, representing 57% of goods exports. It also reports a 3% increase in value-added textile exports to $13 billion.
However, APP’s reporting of Pakistan Bureau of Statistics data gives a different annual total. It places FY26 textile exports at $17.932 billion, up 0.26% from $17.887 billion. The available reports do not explain the discrepancy.
Read More: Pakistan Earns $3.379bn From Textiles as Knitwear Tops $1bn
Looking ahead, Topline expects FY27 budget measures and lower financing costs to support sector profitability. Companies are also adopting renewable energy and other cheaper energy sources to control expenses and remain competitive.
Nevertheless, high energy costs remain a near-term challenge. Topline also identifies uncertainty over Pakistan’s GSP+ trade status as a risk. A potential slowdown in the United States and European economies could further weaken demand, complicating efforts to turn higher profits into sustained sales growth.
