Profits of Pakistan’s top 20 listed textile companies rose 11 percent year-on-year to Rs. 51.9 billion in fiscal year 2026, driven by lower finance costs and a decline in effective tax rates, according to Topline Securities.
The companies generated combined sales of Rs. 1.4 trillion, equivalent to around $5 billion, largely unchanged from the previous year. The 20 companies account for 83 percent of the total market capitalization of the selected listed textile sector.
The effective tax rate of the companies fell to 33.2 percent in FY26 from 37.1 percent a year earlier, mainly due to reversals of deferred tax liabilities following changes in the future super tax treatment of exporters.
Meanwhile, finance costs declined 19 percent year-on-year to Rs. 54.5 billion, which Topline attributed primarily to lower financing rates and reduced borrowings under the Export Finance Scheme.
Gross margins remained stable at 13.1 percent, while gross profit and sales declined 0.2 percent and 0.3 percent, respectively.
Pakistan’s textile exports reached a record $17.6 billion in FY26, up 2 percent year-on-year, accounting for 57 percent of the country’s total goods exports. Value-added textile exports increased 3 percent to $13 billion. Interloop, Sapphire Textile Mills and Nishat Mills were the three largest contributors to the listed sector’s profits, collectively accounting for 48 percent of total earnings.
Interloop’s consolidated profit rose 129 percent to Rs. 12.7 billion, supported by improved gross margins, lower finance costs and a sharp increase in other income. Its sales grew 5 percent to Rs. 187.7 billion.
Sapphire Textile Mills’ unconsolidated profit increased 73 percent to Rs. 6.8 billion, despite a 13 percent decline in sales to Rs. 81.2 billion. The improvement was driven primarily by higher other income, lower finance costs and a reduced effective tax rate.
In contrast, Nishat Mills’ unconsolidated profit fell 9 percent to Rs. 5.5 billion, mainly due to lower dividend income and a contraction in gross margins. Its sales increased 2 percent to Rs. 181.6 billion.
Looking ahead, Topline expects measures announced in the FY27 budget and lower financing costs to support textile sector profitability. Companies are also shifting towards renewable energy and other lower-cost energy sources to manage energy expenses and remain competitive.
However, high energy costs remain a key near-term challenge. Uncertainty over Pakistan’s GSP+ status and a potential slowdown in major developed economies, including the United States and European countries, also pose risks to the sector’s outlook.
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