Wahdat's IPO: Crack This Before You Subscribe

April 20, 2026 (MLN): You must have visited a modern grocery store in Karachi, Lahore, or Islamabad in the last several years, and there is a good chance you have seen a carton of Farm Fresh Eggs on the shelf perhaps without giving it a second thought.

But behind that modest carton is a business story worth understanding, especially now that the company behind it is inviting ordinary Pakistani investors to become shareholders.

Wahdat Poultry Farm Limited is Pakistan's pioneering name in packaged and nutritionally enriched eggs.

18 Years of Building Something Real

Wahdat Poultry Farm Limited did something genuinely hard. In 2007, when Pakistan's egg market was entirely unorganized, loose eggs sold by weight at street-level pushcarts, a group of entrepreneurs led by retired Air Marshal Aurangzeb Khan decided to put an egg in a branded carton, enrich it with Omega-3, and charge a premium for it. Nobody was doing this. There was no existing consumer demand to capture. They had to create the category themselves.

Eighteen years later, Farm Fresh Eggs sits on the shelves of Imtiaz, Carrefour, Metro, Jalal Sons, CSD, and 1,500 retail outlets across Pakistan. Revenue has grown from PKR 1.58 billion in FY22 to PKR 2.79 billion in FY25 at a compound annual rate of 21%.

Four automated layer houses, sourced from Big Dutchman (Germany) and Tecno (Italy), run at 100% capacity. The Company holds ISO 22000 and FSSC 22000 certifications. Karandaaz Pakistan, backed by UK development money, invested PKR 500 million in equity in 2020.

The 500% Premium! That Is Not a Typo

The Company is now seeking a listing on the Main Board of the Pakistan Stock Exchange, with a floor price of PKR 12 per share against a face value of PKR 2 to raise PKR 600 million from the public.

That translates into a 500% premium, a number that quietly sets the tone for everything that follows. 

What Are You Actually Paying For? Let Us Unpack the P/E

At PKR 12 per share on post-IPO earnings, the implied P/E is 13.77x. The Lead Manager benchmarks this against a food sector weighted average P/E of 23.31, arguing investors are getting a 47% discount.

This is where the story gets interesting and where investors need to slow down and read between the lines rather than just the headline multiples.

At first glance, the valuation pitch is neat and compelling. A PKR 12 share price, a 13.77x P/E, and a claimed ~47% discount to the food sector’s weighted average P/E of 23.31x. On paper, it sounds like you are being offered a growth story at a bargain.

But not all “discounts” are created equal.

The peer group itself is doing a lot of heavy lifting here. Names like Nestlé and Unilever dominate that weighted average, businesses with decades of brand power, pricing control, export depth, and extremely stable cash flows. Comparing a mid-sized poultry player to FMCG giants is, frankly, apples to oranges. Even the prospectus quietly admits this by saying these companies are not direct comparables.

If you shift your lens to more relevant names, companies like Barkat Frisian Agro Limited, The Organic Meat Company Limited, or Big Bird Foods Limited, the picture changes. The sector median P/E is around 13x, not 23x.

Suddenly, Wahdat at ~13.77x is not a discount story; it’s roughly at par, if not slightly expensive for its risk profile.

A significant portion of current profitability is cushioned by a PKR 384 million tax shield. Strip that out, or even normalize it, and earnings come down. Which means the “real” P/E investors are paying is higher than what is being marketed.

In simple terms, the denominator (earnings) is temporarily inflated, making the multiple look cheaper than it actually is.cheaper than it actually is.

Now layer on the bigger question: what exactly are you paying a premium for?

Anyhow, strong businesses deserve premiums. But premiums need anchors.

Here, the justification leans heavily on a DCF model projecting 51% PAT CAGR and revenues scaling to PKR 13.5 billion. Management has been clear that no long-term contracts are backing this growth. It is a capacity-led, assumption-driven forecast.

So the valuation is not being built on locked-in cash flows; it is being built on expectations.

What We Asked, What They Said

At Mettis Global Research, we approached this IPO with one simple objective: to ask the questions an investor would ask if their own money were on the line. We reviewed the prospectus, engaged with management, and received written responses.

What follows is that conversation alongside what we believe investors should read between the lines.

With that foundation established, let us turn to the questions we asked and the answers we received.

Q1 — How Much of the Profit Is Cash-Backed?

MG: Your profitability has grown strongly, with PAT rising from PKR 64 million in FY22 to PKR 242 million in FY25, alongside revenue expansion and a meaningful improvement in operating margins.

However, two aspects stand out. A portion of earnings is driven by non-cash IAS 41 fair value gains, and despite reported profits, the company generated negative operating cash flows for three consecutive years (FY21–FY23), only turning marginally positive thereafter.

Given this disconnect between accounting profits and cash generation, how should investors assess the quality and sustainability of earnings? Specifically, what portion of profits is truly cash-backed and recurring, and how should we think about the volatility of IAS 41 adjustments?

Management Response: Wahdat’s profits include both real operating earnings and non-cash IAS 41 gains, so it’s important to view them separately. The cash-backed, recurring earnings come from the core egg production.

IAS 41 gains can make profits look higher in some years, but they are accounting adjustments and can fluctuate over time. Earlier negative cash flows were mainly due to investment in flock growth and working capital, not weak operations. Now, as the business has scaled, cash flows are improving and aligning more closely with profits.

On the income statement, two key components drive this:

• Operating costs (cash): rearing expenses like feed, labour, and utilities are expensed as incurred.
  
• Fair value gain (non-cash): changes in flock value are recorded under IAS 41.
  

These two often move in opposite directions and partially offset each other, higher rearing costs can coincide with rising fair value gains as the flock matures.

So, they should not be viewed in isolation, and investors should focus on normalized earnings and cash flows to assess true performance.

Our Take: Management should have shared the exact rupee breakdown for each of the last four years, specifically, what portion of reported PAT came from IAS 41 gains versus cash operating earnings? Without this number, asking investors to "focus on normalised earnings" is advice without a tool to follow it.

The honest point for investors is this: IAS 41 fair value gains are non-cash income. In FY22 and FY23, these gains were significantly larger than the operating profit from selling eggs, meaning the reported profit in those years was predominantly an accounting entry rather than money in the bank. 

Market Insight: what actually happened in 2024, 2025.

It is also important to understand that the last two years were, by most accounts, “jackpot years” for poultry farmers. Egg prices remained elevated. Margins were strong. Returns were exceptional but the cycle is now shifting.

Egg prices have softened sharply in recent months. Also, industry sources point to a surplus of birds in the system. Obviously, this too will impact the margins to re-emerge.

This matters because the numbers investors are seeing today are built on a favourable cycle, not a stressed one. And cycles, as markets often remind us, do not stay generous forever.

Q2- Tax Quality & Sustainability

MG: Another area that stands out is the movement in tax expense. In FY23 through FY25, the company reported positive tax charges, which may indicate the utilization of prior losses, deferred tax adjustments, or rebates. However, in 1HFY26, we see a decline in profit despite continued operations.

 Could you help us understand whether the current tax profile is influenced by carried-forward losses from earlier years, and how sustainable your effective tax rate and post-tax profitability are going forward?

Management Response: The current tax profile is significantly influenced by carried-forward unabsorbed tax depreciation of approximately PKR 384 million, which is being utilized to reduce taxable income. This has supported a lower effective tax rate in recent years, contributing to stronger post-tax profitability.

Going forward, a key structural benefit is that the Company’s pasteurization business will operate under a 10-year tax holiday due to its location in a Special Economic Zone. This will meaningfully support cash flows and reduce tax burden on that segment of income. The remaining income will continue to be taxed at normal corporate tax rates, leading to a blended effective tax rate.

Our Take: PKR 384 Million of Borrowed Profitability

Wahdat holds PKR 384 million in accumulated unabsorbed tax depreciation that is actively reducing its current tax bill. To put this in perspective, PKR 384 million is roughly 1.6 times Wahdat's FY25 PAT. This shield is temporary, as management acknowledges, the effective tax rate will normalise over time. When this shield depletes, the effective tax rate will normalise upward. Post-tax profits will shrink even if the core operations are growing steadily.

Management should have also shared these numbers too that at the current rate of utilisation, when will the PKR 384 million tax shield be fully exhausted, and what will the normalised effective tax rate be at that point?

The 10-year SEZ tax holiday on the pasteurisation plant is genuinely positive news, and we were pleased to learn of it, though investors should note this benefit depends on the plant becoming operational within the qualifying window.

The 10-year tax holiday under Special Economic Zone rules partially offsets the deferred tax normalization, but only if the plant is commissioned on schedule. That is a significant conditional.

Q3- Were There Any Loss-Making Years?

MG: Could you clarify whether there were any loss-making years before FY21, and if so, whether those losses are still impacting current earnings through tax adjustments or other accounting treatments?

Management Response:  Until 2023, when the Company was subject to alternate corporate tax at 17%, taxable profits were not fully adjusted for depreciation, which led to the accumulation of unabsorbed tax depreciation (now around PKR 384 million). This is not linked to recurring operating losses, but rather a tax timing effect under the minimum tax regime. These accumulated amounts are now being utilized to offset taxable income, reducing current tax expense and effective tax rate.

As a result, current earnings benefit from lower tax charges, but this is temporary in nature.

Over time, as the unabsorbed depreciation is utilized, the tax rate will gradually normalize, with no impact on underlying operating profitability.

Our Take: Despite us asking, Management did not disclosed whether there were any year, specifically FY20, or FY19 in which Wahdat reported a net accounting loss, not just a tax loss.

The prospectus presents FY21 through 1HFY26 and nothing before that. The PKR 384 million shield is a financial echo of years you cannot see in the document.

Q4- How Does PKR 2,241 Per Bird Work? 

MG: Turning to the balance sheet, the valuation of biological assets is an area we have examined closely. As of June 2025, biological assets are recorded at approximately PKR 704 million, rising further to around PKR 787 million in March 2026.

Based on disclosed bird counts, this implies a per-bird valuation ranging between PKR 1,570 and PKR 2,241. However, our market checks suggest that comparable layer hens typically trade in the range of PKR 1,000 to PKR 1,200 depending on age and productivity.

Could you walk us through the valuation methodology applied under IAS 41, including key assumptions such as discount rates, expected productive life, and egg pricing? Additionally, has this valuation been independently verified, and how should investors assess the risk of reversal if these assumptions change?

Management Response: Under IAS 41, the live layer flock is measured at Fair Value Less Costs to Sell (FVLCTS), typically using a Level 3 discounted cash flow (DCF) approach under IFRS 13. This means the valuation already reflects the present value of expected future cash flows from the flock, including egg production, feed costs, mortality, and cull value.

Key inputs include remaining productive life, egg prices, feed costs, production rates, and discount rates (around 13.6%–13.9%). Because the valuation is forward-looking, the fair value already embeds expected future profitability of the flock. On the income statement, two components work together:

• Cash operating costs (rearing): feed, labour, utilities are expensed as incurred
  
• Fair value gain (non-cash): change in flock value is recognized under IAS 41

These two lines often move in opposite directions and partially offset each other, as heavy rearing spend in early stages builds a flock that later shows higher fair value gains.

Importantly, rearing costs are not capitalised, because doing so would lead to double counting.

Since the DCF-based fair value already includes expected future costs and returns, adding those same costs again would artificially inflate asset values.

Fair value already captures the net future profitability of the flock, so ongoing costs must be expensed rather than added to the balance sheet.

From an investor perspective:

IAS 41 gains are valuation-driven and timing-based, not cash profit.

Earnings should be assessed alongside flock age profile, production volumes, egg price cycles, and feed cost trends. Volatility is expected because the valuation reflects changing inputs at each reporting date.

In summary, IAS 41 measures the economic value of the flock at a point in time based on future cash flows, not historical cost.

Our Take: This is the most technically complex element of Wahdat's financial story, and the most consequential for investors who want to understand what they are truly paying for.

Under IAS 41, Wahdat values its live flock using a discounted cash flow model. The approach is correct as a matter of accounting standards. A DCF captures the present value of all future egg revenues a bird will generate, something a spot market transaction does not account for. Management disclosed, for the first time in response to our questions, that they apply a discount rate of 13.6–13.9%.

Important read:

DCF models, by design, are sensitive to assumptions, egg prices, mortality rates, feed costs, productive cycles, and discount rates. And these inputs are not purely mechanical; they involve management judgment. In Wahdat's case, the valuation appears to be leaning on optimistic assumptions (Which in the later part of this article we will share) embedded within those inputs.

 That does not make it incorrect from an accounting standpoint, but it does make it assumption-heavy. When assumptions carry more weight than observable market benchmarks, investors should pause and ask: is this valuation reflecting reality, or pricing in a best-case scenario? Accounting standards provide the framework. They do not eliminate subjectivity. They simply formalise it.

In our response, they could have simply shared what egg price per tray was used in the DCF as of March 2026, and what remaining productive life was assumed for the average bird in the flock at that date?

That said, investors should keep one number in mind. As of March 31, 2026, Wahdat's own published financial statements show 351,155 birds with a total biological asset value of PKR 787 million, implying PKR 2,241 per bird. Our channel checks in Sargodha found the open-market price of comparable layer hens at PKR 1,000 to PKR 1,200.

The gap reflects the DCF premium for future egg-laying potential, which is entirely legitimate, but it also means that if egg prices fall, if the productive life assumption is shortened, or if mortality assumptions are revised, the valuation will decline, and that decline will flow directly into the P&L as a loss. We note that egg prices have softened since February 2026, as mentioned earlier.

Q5- Over-Aged Birds. How Are End-of-Cycle Flocks Valued?

MG: Building on that, we understand that poultry operations involve flocks at different stages of their lifecycle. In industry practice, birds beyond approximately 130 to 148 weeks tend to have significantly lower residual value, often close to PKR 300 per bird. Could you clarify how such over-aged birds are valued in your financials?

Specifically, is there any scenario where older birds continue to be carried at elevated values, which could potentially overstate the biological asset base and reported profits?

Management Response: As already noted, all biological assets are measured strictly at Fair Value Less Costs to Sell (FVLCTS) at each reporting date, in line with IAS 41.

For over-aged or late-cycle birds, valuation is not based on a fixed residual market price, but on their expected remaining economic benefit, which typically declines as productivity reduces.

In practice, this means older birds contribute less to future cash flows due to lower egg production and eventual culling value.

Importantly, there is no scenario where birds are carried at inflated or historical values, as IAS 41 requires continuous remeasurement at each reporting date using updated assumptions.

Any reduction in productivity or shortening of remaining useful life would automatically result in a lower fair value, not an overstated asset base.

As a result, older flocks are not carried at elevated values, rather, their value naturally converges toward salvage value as economic productivity declines.

From an investor perspective, this is why biological assets can fluctuate, but also why IAS 41 ensures the balance sheet reflects the current economic reality of the flock, not historical cost or optimistic assumptions.

Our Take: The productive life of a Wahdat layer hen is defined in the prospectus as extending to approximately 130 weeks.  When a bird passed its age, its market value is the culled meat price, approximately PKR 200 to PKR 300 in the open market. Yet the aggregate balance sheet value of PKR 787 million implies PKR 2,241 per bird. Even within a DCF framework, a bird with no remaining productive life has a DCF value equal to its salvage price.

The management has not unveiled how many birds in the March 2026 flock of 351,155 are at or beyond 130 weeks. And what carrying value is attributed specifically to those end-of-cycle birds? Without it, the PKR 787 million cannot be independently assessed.

It matters because each upward movement in the biological asset value flows directly into reported PAT as income. The P/E multiple you are paying at PKR 12 is applied to earnings that include these valuation movements. If the flock ages, or if egg prices soften, as they have since February 2026, the asset value declines and that decline becomes a P&L loss.

Q6- Cash Flow & Debt. How Is Liquidity Being Managed?

MG: From a liquidity perspective, the company reported negative operating cash flows for three consecutive years between FY21 and FY23, while total debt has now reached approximately PKR 885 million, with a substantial portion being short-term.

Given this backdrop, how does the company plan to manage its working capital requirements and overall liquidity position, particularly in a rising interest rate environment or under operational stress?

Management Response: The negative cash flows in FY21- FY23 were mainly due to a growth phase, where the Company invested heavily in flock expansion and working capital. This used cash in the short term but supported future production.

The current debt of around PKR 885 million, including short-term borrowings, is typical for a working capital-based poultry business. Liquidity is managed through tight control of feed, inventory, and receivables.

Egg sales provide regular and frequent cash inflows, which support repayment needs.

As the business has matured, cash flows are improving and becoming more stable. Going forward, liquidity pressure is expected to reduce as operations normalize.

Our Take: The explanation of the FY21–FY23 cash outflows as investment-driven rather than operational in nature is a reasonable characterisation of a business scaling rapidly with Karandaaz backing. The improvement in operating cash flow in FY24 (PKR 20 mn) and FY25 (PKR 51 mn) is a positive trend.

Investors should be aware, however, that the entire PKR 600 million raised in this IPO is fully allocated before the first rupee arrives, PKR 270 mn to the pasteurisation plant, PKR 180 mn to new flock rearing, and PKR 150 mn to working capital and the licensing model. There is no unallocated buffer.

If any element of the plan runs over budget or behind schedule, the Company will need to rely on its banking relationships for flexibility. The renewal of Askari Bank's short-term facilities — which were due to expire on March 31, 2026 — is accordingly a development every investor should track.

Q7- Pasteurisation: Why 45% of IPO Funds for a New Segment?

MG: A significant portion of the IPO proceeds, approximately PKR 270 million or 45%, is allocated toward establishing a pasteurisation plant, representing a meaningful strategic shift into a new segment. While diversification is understandable, this appears to be a larger allocation toward an unproven segment than toward expanding the core egg business.

Could you elaborate on the rationale behind prioritizing pasteurisation over scaling existing operations, especially when there appears to be unmet demand in the current business?

Management Response: The allocation toward the pasteurisation plant is not a shift away from the core business, but rather a value-add extension of the existing egg production chain.

The core layer farming business remains the Company’s primary revenue and cash-generating engine. However, pasteurisation is being introduced to capture additional margin from downstream processing, reduce reliance on raw egg price volatility, and expand into higher-value, food-safety–driven demand segments.

This segment is also closely linked to the existing operations, as it utilizes the Company’s own and sourced eggs under the Quality-Assured Procurement Model, making it a natural integration rather than a standalone diversification.

The rationale for prioritizing this investment is:

• It moves the Company up the value chain, improving unit economics per egg
• It addresses growing demand from institutional buyers (food, bakery, HoReCa and processed food sectors)
• It enhances price stability and margin resilience versus selling only raw eggs
• It strengthens food safety and traceability standards, which are increasingly required in the market

At the same time, expansion of the core business is not being ignored, it continues through ongoing flock optimization and capacity utilization improvements, which require comparatively lower upfront capital.

Pasteurisation is not a replacement for core growth but a complementary, margin-enhancing layer, designed to improve profitability quality and reduce commodity exposure over time.

Our Take: The strategic logic is well-presented, and the ambition to move up the value chain is entirely understandable. Pakistan's food processing sector genuinely does need domestic sources of pasteurised liquid eggs.

The question we would gently flag for investors is one of sequencing and risk: Wahdat's feed mill runs at 50% of capacity, and its pulp packaging machine runs at 38%. Adding more layer sheds, which would be lower-risk and would absorb this underutilised capacity, was an alternative path not taken.

The choice to prioritise a new processing segment over deepening the proven business is a strategic bet that investors are effectively funding. That does not make it wrong, but it does mean investors are taking on execution risk in an unproven segment.

Q8- What Underpins PKR 13.5 Billion by FY30?

MG: The prospectus outlines an ambitious growth plan, with revenues projected to increase from PKR 3.4 billion in FY26 to PKR 13.5 billion by FY30, implying nearly a fourfold expansion within four years.

Could you provide more clarity on what specifically underpins this projection? Are there firm contracts, customer commitments, or market expansions already in place, and what are the key assumptions that must hold true for this growth to materialize?

Management Response: The projected revenue growth from PKR 3.4 billion in FY26 to PKR 13.5 billion in FY30 is primarily driven by a combination of capacity expansion, operational scaling, and value-chain integration, rather than firm long-term contracts.

No fixed multi-year offtake contracts are underpinning the entire projection; instead, the model is based on historical demand trends, existing customer relationships, and market depth in the egg and processed egg segment.

The key assumptions behind this growth include:

• Expansion of flock size and production capacity, enabling higher egg output over time
• Improved capacity utilization and reduced downtime across cycles
• Growth in institutional and industrial demand (bakeries, HoReCa, food processors)
• Contribution from the new pasteurisation segment, which increases realization per unit
• Gradual formalization of supply chains under the Quality-Assured Procurement Model
• Stable input-output economics, particularly feed cost and egg price dynamics within historical ranges 

The growth is therefore supply-capacity-led rather than contract-locked, supported by a large and recurring domestic demand base for eggs and processed egg products.

The projections assume that as capacity comes online and integration improves, the Company will be able to convert existing and expanding market demand into higher volumes and better realizations, rather than relying on pre-secured contractual commitments.

Our Take: This is important information for investors to hold that management is confirming that there are no fixed multi-year offtake contracts behind the projection. A nearly four-fold revenue increase in four years is an ambitious target, and it is built on assumptions rather than commitments.

That does not mean the projection is unreachable. Pakistan's egg market is large, the category is underpenetrated, and Wahdat is the clear leader. But investors should understand that the floor price of PKR 12, supported by a DCF model projecting this growth is priced for a future that management themselves describe as assumption-based.

Q9- Farm Fresh LLC- Who Is the Entity Behind 50% of Export Revenue?

MG: We also note that a single entity, Farm Fresh LLC, contributed approximately 50% of export revenues in FY25. Given the limited public information available on this entity, could you elaborate on the nature of this relationship? Additionally, is there any direct or indirect linkage between this entity and the company’s sponsors or management, and how should investors think about concentration risk in this context?

Management Response: Farm Fresh LLC is an independent export trading partner, and there is no ownership, control, or related-party linkage with the Company’s sponsors or management.

The 50% export contribution in FY25 reflects a channel concentration during early-stage export scaling, not exclusivity.

The underlying demand, however, remains diversified across multiple end customers in export markets. There are no long-term exclusive supply commitments with this entity. The Company is expected to export around 19% of total sales by 2030.

Our Take: The confirmation that Farm Fresh LLC is an independent, arm's-length trading partner with no related-party connection is welcomed. The concentration point, however, remains relevant for investors: a single intermediary representing 50% of all export revenues, and approximately 8% of total company revenues, is a meaningful dependency.

If that relationship were to reduce or pause for any commercial reason, the Company's export trajectory would be affected. The ambition to grow exports to 19% of total revenues by FY30 will require either deepening the Farm Fresh LLC relationship or developing several comparable-scale export channels. Investors should watch export revenue diversity as a quarterly indicator.

Q10- McDonald's Relationship 

MG: The company’s association with McDonald’s is prominently highlighted throughout the prospectus, reflecting a strong branding advantage. However, from a revenue perspective, the contribution appears relatively small, at around 1% of total sales.

Could you help investors understand the strategic value of this relationship beyond immediate revenues? Specifically, how does it enhance quality credentials, export potential, or future growth opportunities?

Management Response: The McDonald’s relationship contributes only around 1% of local sales, so its current revenue impact is limited. Its real value is strategic, not financial, as it requires strict global standards of food safety and quality. This acts as a third-party validation of the Company’s production and hygiene systems. It strengthens credibility with other institutional and food service customers. It also supports export readiness by aligning with international compliance standards. Overall, it enhances brand trust and future growth opportunities, rather than current revenue contribution.

Our Take: We appreciate management's directness in acknowledging that McDonald's revenue impact is limited; this is exactly the kind of transparency that builds investor trust. The strategic value they describe, quality validation, institutional credibility, and export readiness, is genuine and should not be dismissed.

Our observation is simply one of proportion: the McDonald's relationship appears approximately 28 times in the final prospectus. When a 1% revenue customer receives that level of prominence in a public offering document, it naturally shapes the first impressions of investors reading the prospectus for the first time.

The Company's real revenue base, Imtiaz, Jalal Sons, Punjab Cash & Carry, Metro, Carrefour, CSD, is arguably more impressive and more commercially significant than the McDonald's association, and investors would benefit from those relationships being given equal narrative prominence.

Q11- Karandaaz Repayment. Should Retail Investors Fund This?

MG: We also observe that a portion of the IPO proceeds, approximately PKR 50.5 million, is allocated toward repayment of a loan to Karandaaz. Some investors may question why public funds are being used to repay an existing institutional lender. How would you address this concern, and how should retail investors interpret this allocation in the broader context of value creation?

Management Response: This allocation directly helps improve gearing. By repaying the Karandaaz loan through IPO proceeds, the Company reduces its overall debt level, which leads to a lower debt-to-equity ratio (gearing) post-IPO. This strengthens the balance sheet and reduces reliance on external borrowing. It also improves:

• Interest coverage, as finance costs come down
• Liquidity flexibility, with fewer fixed repayment obligations
• Financial stability, especially during input cost or price volatility cycles

Importantly, this is not just a refinancing move, it is part of a broader capital restructuring that shifts the Company toward a more equity-supported structure. Overall, the result is lower gearing, reduced financial risk, and a stronger foundation for future growth.

Our Take: Paying down debt does reduce gearing and improve interest coverage, and that benefits all shareholders, including new retail investors. The loan terms, which management separately confirmed carry an interest rate of 3-month KIBOR plus 0.5% per annum (reduced from 3M KIBOR + 2% in July 2023), are reasonable in the current rate environment.

Our observation is a governance one rather than a financial one: the same institutional shareholder who extended the loan also holds 22.97% of the Company's equity and has a nominee director on the Board. Ensuring these interactions are transparently governed. For retail investors, the practical takeaway is simple: a portion of the first tranche of excess proceeds goes to retiring this facility, which is disclosed and explained.

Q12  Construction Cost & Second-Hand Equipment?

MG: Another point relates to the estimated cost of land development and building, which is stated at around PKR 55 million. Based on comparisons with similar projects in the industry, this figure appears relatively low. Could you provide more detail on how this cost has been estimated? Additionally, what due diligence has been conducted regarding the use of second-hand equipment, and what operational risks might this introduce?

Management Response: The PKR 55 million civil work cost is based on fully quoted and verified contracts, with no expected cost overruns, as all key quotations have been finalized in advance.

For machinery, second-hand equipment is used selectively and is tested and certified by the OEM before installation, ensuring performance reliability.

In addition, the main sponsors bring prior hands-on experience of setting up and operating a milk pasteurization plant, which has similar technical specifications and operational processes to the proposed egg pasteurization facility.

This experience supports better execution, operational efficiency, and risk mitigation in plant deployment.

Overall, the project benefits from cost certainty, OEM-certified equipment, and relevant sponsor experience, reducing both execution and operational risks.

Our Take: The confirmation that costs are based on finalised quotations and that refurbished equipment has been OEM-certified is encouraging. Management's reference to prior dairy pasteurisation experience is also a reasonable credential for project management confidence.

Our observation is a practical one for investors: PKR 55 million for 17,000 square feet of food-grade construction on an undeveloped SEZ plot works out to approximately PKR 3,235 per square foot.

Independent construction professionals we spoke with suggested food-grade facilities in Pakistan currently range between PKR 6,500 and PKR 8,000 per square foot when all compliance infrastructure, HVAC, drainage, sealed surfaces, utility connections, boundary wall and site development are included.

We are not suggesting the budget is wrong; the Company has finalised quotations that we have not seen. We are simply flagging this as a number investors may wish to ask about should the opportunity arise, and to watch for any cost revisions in post-IPO progress reports.

Q13- Avian Disease Risk. How Is an Uninsured PKR 787 Million Asset Protected?

MG: We note that the company’s entire flock is concentrated in a single geographic area, Sargodha, and that there appears to be no insurance coverage against avian disease or livestock mortality. In the event of a disease outbreak such as avian influenza, what would be the financial and operational impact on the business, and are there any contingency measures in place?

Management Response: The Company’s flock is not concentrated at a single site; it is distributed across two separate locations within the Sargodha region, in line with industry practice and regulatory requirements.

These farms are compliant with the minimum mandated distance of 1.5 km between facilities, as required under applicable biosecurity and livestock regulations. This spatial separation helps reduce cross-contamination and disease transmission risk between flocks.

Operations are further supported by strict biosecurity protocols, vaccination programs, and veterinary monitoring systems. While insurance for avian disease is not available, risk is primarily managed through preventive controls and regulated farm spacing.

Overall, the structure ensures regulatory compliance and reduced operational risk through geographical separation within the same production cluster.

Our Take: The Sargodha region, like other poultry clusters in Punjab, has historically seen periodic outbreaks of avian influenza and related diseases, typically emerging in seasonal waves. These are not annual events, but they are not rare either. They are part of the industry's long-term reality.

Management's answer covers the procedural safeguards competently. But a 1.5 km separation is the regulatory minimum, not an epidemiological buffer. H5N1 strains have been documented spreading through airborne aerosols and wild bird contact at distances well beyond 1.5 km.

PKR 787 million of biological assets, nearly 30% of the total balance sheet, sits in a region with a documented avian disease event frequency of once every 18–24 months. There is no insurance backstop. 

WHAT THE MARKET SURVEY FOUND?

Mettis Global Research conducted independent retail price surveys. Here is what we found:

Source: Retail price survey by Mettis Global

The retail price comparison tells an interesting story. Wahdat is not pricing at a dramatic premium, it is operating within a competitive band. A PKR 20 per dozen premium on the flagship Omega-3 product over its nearest branded competitor is a differentiation, not a moat. The more telling comparison is at the farm gate, not on the supermarket shelf.

The Farm Gate Comparison

Here is the comparison that one can raise, and it is the kind that does not require a financial model to understand.

According to industry experts, a 400,000-layer bird farm with its own feed mill, selling eggs directly at farm gate, has generated annual profits exceeding PKR 250 million over the past two years, driven by exceptionally strong egg prices. Wahdat's profitability, despite branding, integration, and retail penetration, appears more moderated in comparison.

That raises a direct question for investors: if a simpler business model, cash sales, no branding costs, no distribution overhead, no packaging losses, no retail credit cycles, can generate PKR 250 million in annual profit during strong years, where exactly does Wahdat's more complex, more expensive model show up in superior returns?

Industry insights suggest that a meaningful portion of cost of goods, in the vicinity of 20% when branding, packaging, logistics, breakage, and distribution are combined, is tied to the branded retail operation. On Omega-3 eggs, the premium over an unbranded competitor on the retail shelf is PKR 20 per dozen.

Two Discoveries That Every Investor Should See

When we secured access to Wahdat Poultry Farm Limited's financial model, the same model used to build the DCF valuation that justifies the IPO floor price of PKR 12 per share, we did something straightforward. We took the egg price assumptions embedded in the model and placed them side by side with the actual egg prices published monthly by the Pakistan Poultry Association.

For most of the period, the two lines track each other reasonably well. But starting from February 2026, the two most recent months for which actual data exists, they diverge in a way that deserves investor attention.

We also examined the Flock Schedule within the financial model, which shows the age and size of birds across Wahdat's houses. What we found there raises a separate but related question about the PKR 787 million biological asset value on the March 2026 balance sheet.

This note lays out both findings with full numbers so investors can assess them independently. We are not making an allegation of intent, assumptions in financial models can reflect genuine management expectations. But these gaps are material, and investors should be aware of them before bidding.

FINDING 1: Egg Price Assumptions in the DCF Model vs. PPA Actual Data

The Pakistan Poultry Association (PPA) publishes egg price data, the recognised benchmark for domestic egg market prices. The table below shows PPA actual prices for FY25-26 (July 2025 through March 2026) alongside the egg price assumptions embedded in Wahdat's own financial model for the same months. Prices are expressed in PKR per 360 eggs.

Source: Pakistan Poultry Association (PPA) monthly price data for Karachi, and our channel checks confirm that Punjab rates are PKR 180 -210 below; Wahdat financial model.

What the Pattern Tells Us

The first thing to note is the pattern itself, because it is as important as the individual numbers.

For the seven months from July 2025 through January 2026, Wahdat's model was actually modestly conservative. The assumed egg prices were 0.5% to 4.8% below what PPA recorded as actual market rates. A model that uses slightly lower prices than actual is a model being careful; it is building in a margin of safety.

But something changed sharply in February 2026, the month Pakistan's egg prices fell. Wahdat's model assumed PKR 8,932 while PPA recorded PKR 7,928. The gap is PKR 1,004 or 12.7%. Then in March 2026, as prices fell further to PKR 6,483, Wahdat's model assumed PKR 9,835, a gap of PKR 3,352 or 51.7%.

The three-year PPA annual averages are instructive context: 2023 was PKR 8,630, 2024 was PKR 8,736, and 2025 was PKR 8,764. These three years average out to approximately PKR 8,710. Wahdat's FY25-26 full-year model assumption is PKR 9,398, sitting 7.9% above that three-year average.

For a commodity business in a price-sensitive market, a 7.9% structural premium above historical norms embedded in the base case DCF is worth examining.

The Forward Projections: A Significant Assumed Recovery

For the remaining months of FY25-26 where PPA data is not yet available, April, May, and June 2026, Wahdat's model assumes the following:

Note: These are the model's projected rates for months where PPA actual data is not yet published.

To put these forward projections in context: PPA data shows that Pakistan's egg prices have moved between PKR 6,483 and PKR 10,510 over the past 18 months. The model's assumption that prices recover from PKR 6,483 in March to PKR 10,034 by May, a 54.8% jump in two months, is at the optimistic end of what historical price dynamics suggest is achievable.

Why This Matters: The Compounding Effect

The egg price assumptions feed into the valuation in two interconnected ways that compound each other.

First, they drive the IAS 41 biological asset valuation. Under IAS 41, Wahdat values its live flock using a discounted cash flow model. The primary revenue input into that DCF is the expected egg price. If the assumed egg price is higher than actual market prices, the projected future cash flows from the flock are higher than the market would support, producing a higher per-bird carrying value and a larger fair value gain in the profit and loss account.

Second, those inflated profits then feed into the earnings per share used to justify the IPO floor price multiple. The floor price of PKR 12 implies a post-IPO P/E of 13.77x based on projected FY26 earnings of PKR 328 million. If the egg price inputs used to derive those projected earnings are above current market levels, the earnings themselves are overstated  and the multiple applied to them produces a floor price that reflects an optimistic rather than a current-market scenario.

FINDING 2:  Aged Birds in the Flock Schedule

Note: Wahdat's prospectus states the productive life of laying birds extends to approximately 130 weeks. At 108–112 weeks, these birds are approximately 18–22 weeks from the end of their productive cycle.

The Valuation Question

Wahdat's prospectus defines the productive life of layer hens as extending to approximately 130 weeks. Birds at 108 and 112 weeks are approaching the final phase of that cycle. Egg-laying rates in the final weeks of a hen's productive life typically decline meaningfully from peak levels, and these birds are 18–22 weeks from the end of their viable production window.

Market experts consulted by Mettis Global Research in the Sargodha poultry trade assess the value of layer hens at this stage of their lifecycle at approximately PKR 800 per bird, reflecting their remaining limited production value and eventual slaughter price.

The table below compares this market-expert valuation with the implied carrying value on Wahdat's balance sheet:

Important context: The PKR 2,241 per-bird implied value reflects the average across all 351,155 birds in the March 2026 balance sheet. Younger, more productive birds in other houses will carry higher values; the aged birds in Houses 1 and 2 should logically carry lower values. If the two aged houses were valued at the market expert rate of PKR 800 per bird, the biological asset balance sheet entry would be approximately PKR 271 million lower than the March 2026 implied average would suggest.

The IAS 41 Mechanism: Why This Flows into Profits

Under IAS 41, every change in the fair value of biological assets is recognised in the profit and loss account. This means:

If 188,000 birds are carried at close to PKR 2,241 per bird (average balance sheet rate) but their true economic value at 108–112 weeks is closer to PKR 800 per bird, a downward fair value adjustment of approximately PKR 271  million for these two houses would be required when the balance sheet is next remeasured.

That PKR 271  million adjustment would flow as a loss into the profit and loss account, reducing reported PAT, in the period it is recognised.

Investors who subscribed to the IPO on the basis of FY26 projected earnings of PKR 328 million would find that a PKR 271 million biological asset write-down in the same year eliminates virtually all of that projected profit in one accounting entry.

The Combined Picture

The two findings in this note are connected. The biological asset valuation depends on a DCF that uses future egg price assumptions. Those egg price assumptions are, for the two most recent actual months available, materially above what PPA data records as the actual market price. The aged birds in Houses 1 and 2 have limited remaining productive life and, therefore, limited remaining cash flows, but if the DCF uses an inflated egg price, even a small remaining productive life can generate a carrying value that exceeds what the open market would pay.

Final Word:

You are not buying what Wahdat is today. You are paying upfront for what it is expected to become.

That expectation includes: a pasteurisation plant commissioned on schedule; exports growing at 55% per year through a single intermediary; a licensing model delivering 40% of production volumes; egg prices remaining supportive through a cycle that is already turning; and a tax shield transition managed smoothly. The margin for error at a 500% premium is thinner than the prospectus's projections suggest.

Margins are not earned through models or narratives. They are earned, one dozen at a time. The branded premium must exceed the branded cost for the model to expand margins sustainably. Right now, that gap is narrower than the prospectus's growth projections imply.

Disclaimer: Our role is not to tell you whether to invest. Our role is to make sure you understand what you are investing in.