PACRA revises Ghandhara Industries’ outlook to positive

October 19, 2026 (MLN): PACRA has maintained the entity ratings of Ghandhara Industries Limited (PSX: GHNI) at A+ for the long term and A1 for the short term, while revising the outlook to Positive from Stable.

Ghandhara Industries Limited maintained its leadership in Pakistan’s truck and bus market in FY26, with higher sales volumes, revenue growth and improved profitability supporting the Positive outlook revision.

The company’s combined truck and bus market share stood at around 53% in FY26, compared to 59% in FY25. Its truck market share declined to around 58% from 65% a year earlier amid rising competition in an expanding market.

GIL’s total sales volumes increased to approximately 5,263 units in FY26 from 3,402 units in FY25, while revenue climbed to around Rs60.7 billion from Rs37.5 billion.

Despite higher material and royalty costs, the company’s gross margin eased to around 23.1% in FY26, compared to 24.3% in the preceding year. Net margin stood at approximately 11.4%, against 12.2% in FY25.

In absolute terms, net profit increased to around Rs6.9bn in FY26 from Rs4.6bn in FY25.

The company’s financial risk profile remained strong, supported by healthy cash flow generation, a debt-free capital structure and adequate liquidity, keeping its coverage ratios at comfortable levels.

Pakistan’s truck and bus industry recorded substantial growth during FY26, with total sales rising approximately 61% to 8,424 units from 5,232 units in FY25. Truck sales increased around 67% to 7,439 units from 4,444 units in the preceding year.

Industry growth was supported by improved macroeconomic stability, lower financing costs and greater availability of vehicle financing. However, the policy rate stood at around 11.5% at the end of FY26 following monetary tightening toward the close of the fiscal year, potentially moderating financing-led demand.

The sector is also facing changes in the policy environment following the expiry of tariff incentives under the Automotive Industry Development and Export Plan on June 30, 2026. Meanwhile, the New Energy Vehicle Policy 2025–30 targets a 30% share for new energy vehicles in new truck and bus sales by 2030.

GIL manufactures, assembles and markets Isuzu trucks, buses and D-Max pickups in Pakistan, alongside Zhongtong buses, which expanded its product portfolio during FY26. The company operates under the Bibojee Group of Companies and maintains a technical collaboration with Isuzu, Japan.

The Positive outlook reflects GHNI’s continued market leadership during an industry upcycle, improving business scale and profitability, and a strong financial position supported by zero debt and healthy liquidity. Its expanded bus portfolio through the Zhongtong collaboration also supports business diversification.

The ratings remain dependent on the company’s ability to sustain market leadership and profitability amid intensifying competition and a tightening interest rate environment, while preserving liquidity and maintaining low leverage.

The realization of the Positive outlook will depend on GIL sustaining its current performance, achieving projected sales volumes and executing its Zhongtong bus operations within planned timelines.

Adapting its product portfolio and cost structure to changes in tariffs and the transition toward new energy vehicles, alongside prudent management of related-party transactions, will also remain important.

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