Profits of Pakistan’s top 20 listed textile companies increased 11 percent year-on-year to Rs. 51.9 billion in fiscal year 2026, mainly due to lower financing costs and reduced effective tax rates, according to Topline Research.
The companies recorded combined sales of Rs. 1.4 trillion, equivalent to around $5 billion, largely unchanged from the previous year. These firms represent 83 percent of the total market capitalization of the listed textile companies covered in the analysis.
The effective tax rate across the group fell to 33.2 percent in FY26 from 37.1 percent a year earlier. Topline Research attributed the decline mainly to reversals of deferred tax liabilities following changes in the future treatment of super tax for exporters.
Finance costs dropped 19 percent year-on-year to Rs. 54.5 billion, primarily because of lower financing rates and reduced borrowing under the Export Finance Scheme.
Despite the improvement in overall earnings, gross margins remained unchanged at 13.1 percent. Gross profit declined 0.2 percent, while sales fell 0.3 percent.
Pakistan’s textile exports reached a record $17.6 billion in FY26, rising 2 percent year-on-year and accounting for 57 percent of the country’s total goods exports. Exports of value-added textile products increased 3 percent to $13 billion.
Interloop, Sapphire Textile Mills and Nishat Mills were the largest contributors to the listed sector’s profits, collectively accounting for 48 percent of total earnings.
Interloop’s consolidated profit surged 129 percent to Rs. 12.7 billion. Higher gross margins, lower financing costs and a sharp increase in other income supported the growth. Its sales rose 5 percent to Rs. 187.7 billion.
Sapphire Textile Mills reported a 73 percent increase in unconsolidated profit to Rs. 6.8 billion, even as its sales fell 13 percent to Rs. 81.2 billion. Higher other income, lower finance costs and a reduced effective tax rate helped improve its earnings.
Nishat Mills, however, recorded a 9 percent decline in unconsolidated profit to Rs. 5.5 billion. Lower dividend income and weaker gross margins weighed on its earnings, although sales increased 2 percent to Rs. 181.6 billion.
Looking ahead, Topline Research expects measures announced in the FY27 budget and lower financing costs to support textile companies’ profitability.
Textile manufacturers are also shifting towards renewable energy and other cheaper energy sources to control expenses and remain competitive.
However, high energy costs continue to pose a challenge. Uncertainty surrounding Pakistan’s GSP+ trade status and the possibility of slower economic growth in major markets, including the United States and Europe, could also affect the sector’s performance.
