Interloop: Rampant growth continues

April 27, 2021 (MLN): Interloop Limited (ILP) has disclosed financial performance today for the 9MFY2021. According to the insights, the company witnessed a more than two-fold (2.7x YoY) jump in net profits to Rs4.5bn compared to Rs1.66bn profit earned in the same period last year (SPLY).

This translated in earnings per share of the company which stood at Rs5.16/sh compare to Rs1.91/sh recorded in the SPLY.

The remarkable surge in profits is due to an increase in sales and improvement in gross margins.

During the period, Company’s revenues increased by 28.91% to Rs39.13bn mainly, led by higher export sales in both the Hosiery and Denim segments despite the appreciation of PKR against the greenback. In addition, higher utilization of the denim plant given the addition of new customers, and continuous addition of new machineries in its hosiery division also contributed to higher sales.

The gross margin of the company improved to 26% from 23% in SPLY majorly attribute to inventory gains on cotton resulting in higher Spinning segment margins, a potential rise in US$ per-unit prices of all products, and a reduction in losses in the denim segment, a report by Intermarket Securities (IMS)3 said.

On the expense side, the administrative expense and distribution cost jumped by 14.71% and 12.96% YoY respectively. Moreover, income from other sources tumbled by 34.47% to Rs66mn during 9MFY21.

On the upside, a decline of 5.88% YoY in finance cost provided a slight relief to the bottom line due to lower short-term borrowings as well as the lower interest rates.

On the tax front, the company paid Rs353.82mn in terms of taxes during 9MFY21 which is 51.57% greater than what the company paid in the corresponding period of last year.

Overall, the company has shown decent performance during the review period, and its profitability is expected to improve further in the coming quarters as the company is operating at full capacity. According to IMS, ILP has booked orders for the remainder of 2021, which will continue the present growth momentum, while the Denim segment is likely to turn profitable by the end of FY21.

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