Pakistan’s textile sector posted a robust 66% year‑on‑year profit increase in FY26, driven by higher exports, improved gross margins, and lower finance costs, according to AKD Research.

The brokerage noted that AKD Textile Universe profitability rose to PKR 20.2 billion, supported by a 3% YoY revenue increase to PKR 451 billion and a 7% YoY rise in exports to US$ 1.8 billion. Hosiery, denim, apparel, and workwear led growth, while local sales fell 5% YoY to PKR 138.9 billion.

Gross margins improved by 93 bps to 15.6%, aided by lower ramp‑up losses and reduced finance costs, which fell 23% YoY to PKR 17.5 billion amid easing interest rates. The effective tax rate also fell to 33% from 43% last year, driven by improved profitability and fiscal adjustments.

Among individual companies, Interloop Ltd (ILP) and Nishat Chunian Ltd (NCL) led sector earnings growth, with profits rising 2.4x and 2.0x YoY, respectively, on stronger exports and margin expansion. In contrast, Nishat Mills Ltd (NML) saw a 9% YoY decline due to margin attrition and lower dividend income..