Karachi: Nishat Chunian Limited (NCL) recently held a corporate briefing to discuss its financial results for the fiscal year 2025 and provide insights on future strategies. The company recorded a revenue of PkR86 billion, marking a 3% decline from the previous year, primarily due to a decrease in export demand from China.
In its detailed report, NCL revealed that the weaving and home textiles divisions experienced sales increases of 19% and 3%, respectively, while the spinning division saw a 12% decline. The company's net profit after tax (NPAT) improved to PkR789 million, up from PkR692 million in FY24, bolstered by lower finance and distribution costs.
Export sales fell significantly by 49% to PkR31.8 billion, attributed to US-China trade tensions and higher tariffs on Chinese textile imports. However, the company noted signs of recovery in demand from China in the first quarter of FY25.
For the first time since 2022, NCL announced a dividend payout of PkR2 per share. The company's production divisions reported high capacity utilization rates: 99% for spinning, 89% for weaving, and 79% for dyeing and printing.
NCL's energy requirements are largely met by its coal-based power plant, with solar energy contributing around 20% of its total consumption. The company is considering the government's subsidized power tariffs but expressed limited interest due to its existing power generation setup.
The company maintains a cotton inventory duration of six months, resulting in increased short-term borrowings. With a reliance on 70-80% local cotton, management anticipates better margins for the spinning division due to low prices.
NCL has expanded its retail presence with a new store in the UAE under The Linen Company brand. The management also plans to enhance production capacities and retail outreach by the third quarter of FY26.
Geopolitical tensions between the USA and India present potential benefits through import duty dynamics, though the company has yet to see tangible effects. The prevailing tax regime remains a significant challenge for NCL and the broader textile sector.
AKD Securities Limited maintains a 'Buy' stance on NCL, with a June 2026 target price of PkR68 per share, supported by expected export improvements, favorable input prices, and reduced finance costs.