Gul Ahmed Textiles Mills Ltd. (GATM) held an analyst briefing today to discuss its FY26 and first-quarter FY27 financial results, as well as its outlook. Here are the key takeaways:

The company reported a loss of PKR 0.9 billion (Loss Per Share: PKR 1.2) versus a profit of PKR 4.0 billion (Earnings Per Share: PKR 5.4) in the same period last year, mainly due to a decline in gross margin.

Sales for FY26 totaled PKR 131.1 billion, down 17.0% year-on-year from PKR 157.9 billion in the previous year. This decline was mainly due to the discontinuation of the export apparel segment, which previously accounted for approximately PKR 13.2 billion in sales, and lower yarn sales after spinning operations were curtailed for about six months due to uncertainty in the local market. Gross margins contracted to 7.3% in FY26, down from 12.0% in the previous year, mainly due to higher energy costs.

In the first quarter of FY27, the company reported a 2.2x year-on-year increase in profitability to PKR 505.9 million (Earnings Per Share: PKR 0.7), up from PKR 0.2 billion (Earnings Per Share: PKR 0.3) in the same quarter last year. Notably, gross margin improved to 10.6% from 9.8% in the prior year.

Currently, GATM’s energy mix consists of 54% gas, 28% grid electricity, 16% solar energy, and 9% HFO and diesel. The company plans to increase its renewable energy share to 35-40% this year. GATM’s total power requirement is 37 MW, and the current average energy cost is around PKR 36 per kilowatt-hour.

Management noted that over 80% of the cotton used is imported to meet export-market quality standards, with the remaining 20% sourced locally. They also highlighted that the export order book remains healthy for FY27.

Looking ahead, management expects FY27 revenue to remain broadly in line with FY26, while gross margin is anticipated to improve to above 11%.

Regarding the ‘Ideas’ IPO, management indicated that there are no immediate plans for listing.

Courtesy: AKD Securities Limited