Karachi, April 08, 2023 (PPI-OT): Textiles: Impact of macro troubles starts to reflect

We review the Textile Sector performance with a proxy of 8 listed companies for recent quarters (combining trailing 4 quarters). Despite a 30% YoY revenue growth, the sector PAT witnessed a 5% YoY decrease owing to lower margins and escalating financial charges amid record high interest rates.

Interloop (ILP) stood out as the top performer in terms of both highest net sales growth and profit growth, while Nishat Mills (NML) remained highest contributing company to our sample base.

With order intake from USA and Europe expected to slow down further in the coming months owing to build-up in inventories amid contractionary monetary policy in the aforementioned, we do not rule out volumes to decline in upcoming quarters compounded by the impact of local supply chain issues. Augmented by higher energy costs, margins are likely to face pressure as well.