KARACHI, Oct 22 (Focus Pakistan) - Interloop profit surged 54% to Rs4.2 billion in the first quarter of fiscal 2027, driven by derivative gains and a lower tax bill. The hosiery and apparel exporter earned roughly a third of its previous full-year profit in just three months, raising fresh questions for investors about earnings sustainability and the stock's valuation.
The Faisalabad-based company reported on Thursday consolidated net profit of Rs4.2 billion, or Rs3.03 per share, for the quarter ended Sept 30. Earnings rose 14% from the previous quarter.
The result beat at least one brokerage’s forecast. In fiscal 2026, Interloop ltd earned Rs9.06 per share as profit more than doubled to Rs12.45 billion.
Derivative gains
Other income rose 2.42 times to Rs1.7 billion. Realised and unrealised gains on derivatives accounted for Rs1.5 billion of that, according to a brokerage research note, an amount equal to about 36% of quarterly net profit.
Unrealised gains can reverse if exchange or interest rates move against the company’s positions. The note also identified about Rs120 million in performance-based export rebates within other income.
Tax relief
Interloop’s effective tax rate fell to 29.3% from 39.2% a year earlier. The brokerage attributed the decline to the removal of super tax.
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Under the Finance Bill for fiscal 2027, companies that derive more than 80% of turnover from exports no longer pay super tax, The Express Tribune reported in June. Exports dominate Interloop’s business. Customers in the United States and Europe accounted for Rs170.6 billion of its Rs187.7 billion revenue in fiscal 2026, against domestic sales of Rs8.53 billion.
Margins
Gross margin narrowed to 22.7% from 23.3% a year earlier but widened from 20.5% in the April-June quarter. The brokerage had forecast 21.5%.
Higher apparel prices drove the improvement, the brokerage said, citing channel checks and management comments at the company’s annual general meeting. Hosiery prices continued to fall.
Net sales rose 12% from a year earlier to Rs50.7 billion, though they declined 10% from the previous quarter. Finance costs fell 8% year on year to Rs1.6 billion but rose 13% quarter on quarter.
On the expense side, distribution costs climbed 25% to Rs2.0 billion. Administrative expenses increased 6% to Rs2.9 billion.
Valuation
Annualising the first quarter would give earnings of about Rs12.12 per share. At the stock’s Oct 16 close of Rs94.03 on the Pakistan Stock Exchange, that implies a price-to-earnings ratio of about 7.8 times, according to Focus Pakistan calculations. The shares had risen about 22% since the start of the year by that date.
Interloop paid a total dividend of Rs4 per share for fiscal 2026, a yield of about 4.3% at that price.
The annualised figure assumes the derivative gains recur and apparel pricing holds while hosiery prices stabilise. Analysts will watch whether firmer garment prices can offset weaker hosiery pricing once the derivative boost fades.
