Karachi: The Searle Company Ltd (SEARL) has reported an impressive increase in its first-quarter earnings for the fiscal year 2026, surpassing market expectations. The company recorded an unconsolidated profit of Rs854 million, translating to an earnings per share (EPS) of Rs1.45, compared to Rs301 million in the same quarter of the previous year. This marks a year-on-year growth of 2.8 times, driven primarily by significant sales growth.

The net sales for the quarter reached Rs8.6 billion, representing an increase of 28% year-on-year and 51% quarter-on-quarter. This performance exceeded expectations of Rs7 billion, fueled by both higher prices and increased sales volumes. The company had previously faced supply constraints that impacted sales, but these issues have been resolved.

Despite the strong earnings, Searle Company refrained from announcing any payouts, aligning with market predictions. The company's focus has shifted towards enhancing its existing product portfolio following the disinvestment of Searle Pakistan.

Gross margins saw an improvement, rising to 55.9% in the first quarter of FY26, up from 45.8% in the same period last year and 52.6% in the previous quarter. However, distribution expenses increased by 71% year-on-year and 17% quarter-on-quarter, totaling Rs2.6 billion.

The company also benefited from a decrease in finance costs, which fell by 62% year-on-year and 10% quarter-on-quarter. This reduction was attributed to lower borrowing and interest rates, as Searle used proceeds from the divestment of its subsidiary to repay debt.

Searle's tax expenses for the quarter amounted to Rs546 million, with an effective tax rate of 39%, up from Rs148 million and a rate of 33% in the same period last year.

Market analysts maintain a positive outlook on Searle, with a "BUY" recommendation for the stock, which is currently trading at a projected price-to-earnings ratio of 16.2x for FY26 and 10.7x for FY27.