Pakistan’s three major listed textile companies recorded a combined net profit of Rs20.2 billion in fiscal year 2025-26, representing a 66% increase from Rs12.2 billion in the preceding financial year. According to a report by AKD Research, the improvement in earnings at Interloop Limited, Nishat Mills Limited and Nishat Chunian Limited was supported by higher exports, improved gross profit margins, lower financing costs and a reduction in the effective tax rate. The companies’ combined revenue increased by 3% to Rs451.3 billion from Rs437 billion in FY25, while export earnings rose as businesses expanded across hosiery, denim, apparel and workwear. The results indicate stronger profitability for the three major textile manufacturers despite a decline in domestic sales and continued pressure from lower export prices in some segments.
Combined exports of the three companies increased by 7% to $1.1 billion in FY26, compared with $1 billion in the previous year. AKD Research attributed the increase to expansion across several value-added textile product categories, including hosiery, denim, apparel and workwear. Domestic sales, however, declined by 5% to Rs138.9 billion from Rs145.5 billion a year earlier, indicating that the growth in international business helped offset weaker domestic revenue. At the broader industry level, Pakistan’s value-added textile exports increased by 1% year-on-year to $15.5 billion during FY26, according to data from the Pakistan Bureau of Statistics cited in the report. The difference between the companies’ export growth and the overall sector’s performance highlights the contribution of individual business expansion to the combined results of the three listed manufacturers.
The companies’ combined gross profit rose by 10% to Rs70.3 billion from Rs64 billion in FY25. Their gross profit margin also improved to 15.6%, compared with 14.7% in the preceding financial year. The research report attributed much of the improvement to lower initial operating losses as newly installed production capacities achieved higher utilisation rates. As manufacturing facilities became more fully utilised, the companies were better positioned to absorb operating costs across a larger volume of production. However, lower export prices partially offset the benefits of improved capacity utilisation and operating performance. The higher gross profit and improved margin nevertheless contributed to the stronger overall earnings recorded during the year, showing how operational efficiency can influence profitability in a capital-intensive industry.
Financing expenses also declined substantially, providing further support to the companies’ bottom lines. Combined finance costs fell by 23% to Rs17.5 billion in FY26 from Rs22.8 billion a year earlier. AKD Research linked the reduction to lower borrowings amid easing input prices and lower financing rates. Reduced finance costs can improve net profitability by lowering the amount of operating earnings absorbed by interest and other financing expenses. Meanwhile, combined other income declined by 2% to Rs11.1 billion, primarily because of lower dividend income from Nishat Mills’ power subsidiaries. Higher income from financial derivatives at Interloop partially offset this decline. Despite the reduction in other income, the improvement in gross profitability and lower financing expenses helped drive the overall increase in earnings across the three companies.
The effective tax rate for the companies also declined to 33% in FY26 from 43% in FY25. According to the brokerage, the reduction reflected improved profitability, which lowered the impact of minimum taxation applicable to some companies in the preceding year. The remeasurement of deferred tax liabilities following the reduction in the super tax rate under the federal budget for FY27 also contributed to the change. The lower effective tax burden provided additional support to reported net earnings alongside the improvement in operating performance. The combination of stronger gross profit, reduced financing costs and lower effective taxation helped explain why combined net profit increased substantially faster than revenue during the financial year.
At the individual company level, Interloop recorded the strongest earnings growth among the three manufacturers. Its earnings per share increased by 145% to Rs9.39 in FY26 from Rs3.84 in FY25. Nishat Chunian also reported a significant improvement, with earnings per share rising by 103% to Rs6.66 from Rs3.29. The increase at Nishat Chunian was supported by higher exports, improved gross margins, lower finance costs and increased other income. Export performance was particularly strong at Nishat Chunian, where exports increased by 19%, while Interloop recorded export growth of 6%. These results show that the earnings improvement was not uniform across the sector, with the two companies recording substantial gains in per-share profitability.
Nishat Mills reported a different performance pattern, with earnings per share declining by 9% to Rs15.59 from Rs17.10 in FY25. The decrease was primarily attributed to weaker margins and lower dividend income. Its results contrasted with the substantial earnings growth recorded by Interloop and Nishat Chunian, demonstrating differences in operating performance and other income among the three companies. Although the combined figures showed strong growth, the individual results indicate that export performance, production costs, financing expenses and income from subsidiaries continued to influence profitability differently across the listed textile businesses.
The companies also reported stronger combined results in the fourth quarter of FY26. Their quarterly net profit increased by 51% year-on-year to Rs5.86 billion, compared with Rs3.88 billion in the corresponding quarter of FY25. Combined revenue rose by 15% to Rs125.7 billion, while finance costs declined by 30% to Rs3.48 billion. On a sequential basis, net profit increased by 31% from Rs4.49 billion in the preceding quarter. The quarterly improvement provided additional evidence of stronger earnings momentum towards the end of the financial year. Overall, the FY26 results show that higher export revenue, improved production utilisation, stronger gross margins and lower financing expenses played important roles in lifting the combined profitability of Interloop, Nishat Mills and Nishat Chunian, although weaker domestic sales and differences in individual company performance remained part of the sector’s financial picture.
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