Interloop set to outpace Pakistan’s textile export growth

August 20, 2026 (MLN): Interloop Limited (PSX: ILP) is expected to continue outperforming Pakistan's textile industry, with exports projected to grow 3% YoY to around $630m in FY26, compared with industry-wide export growth of 1.9% YoY over the same period.

The company's Apparels segment is likely to cross the $100m mark for the first time this year, according to JS Research.

4QFY26E EPS is projected at Rs2.20, up 16% YoY, taking full-year FY26E EPS to Rs8.87 against Rs3.70 reported in FY25. Full-year DPS is expected to rise to Rs4.00 from Rs1.00 in FY25, including a final DPS of Rs2.00.

The annual earnings growth estimate of 2.4x YoY is primarily attributed to margin expansion across segments, reduced outsourcing for Hosiery demand, improved scale of operations and product mix in the Apparels and Hosiery segments, and the resolution of teething issues and fixed-cost pressures following the commissioning of the Apparels plant last year.

Financial charges are expected to decline nearly 30% YoY on the back of improving internal cash generation and a reduction in the effective cost of debt following the cut in policy rates.

On a sequential basis, 4QFY26 earnings are expected to remain stable at Rs2.20/share. A spike in energy prices, increased use of gas-fired captive power plants due to power outages, and rising raw material costs are likely to result in a marginal QoQ decline in margins.

The company meets 70-80% of its power requirements from the national grid, 8-10% from solar, and the remainder from gas-fired CPPs. On a YoY basis, gross margins are expected to improve by 3 percentage points as the Apparels segment approaches break-even, compared with a negative gross margin of 16% in 4QFY25.

One-time earnings non-cash adjustments cannot be ruled out to account for the Sindh Development Infrastructure Cess (SIDC) and the abolition of super tax against deferred tax liabilities.

By segment, Hosiery revenues are projected at $407m in FY26E against $426m in FY25, Apparel revenues at $108m against $78m, and Denim revenues at $88m against $75m.

JS Research has reiterated its Buy rating on Interloop with a target price of Rs137, citing the turnaround in the Apparels and Denim businesses, savings in financial charges, and lower taxation following the removal of super tax as key drivers of its positive stance on the company. The stock last traded at Rs99.72, with a market capitalization of Rs140bn ($504m).

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