At Nishat Chunian, falling cotton prices rescue profits

For Nishat Chunian, the latest results are a reminder that textile profits are not always made on the topline. In the quarter ended March 2026, the Lahore-based textile manufacturer reported revenue of Rs21.7 billion, down 7% from Rs23.4 billion in the same period last year. And yet, profit after tax rose 33% to Rs642 million, translating into earnings per share of Rs2.67, compared with Rs481 million and EPS of Rs2.00 a year earlier. For the nine months ended March 2026, sales slipped 4% to Rs65.0 billion, while net profit jumped 53% to Rs1.14 billion.

That divergence – lower sales, higher profits – is the story. Nishat Chunian did not grow its way into better earnings. It protected its margins. According to AKD Securities, gross margins in the March quarter improved to 13.0% from 10.5% a year earlier, helped mainly by easing cotton prices and lower energy tariffs. Cost of goods sold fell faster than sales, dropping 10% year on year, which allowed gross profit to rise 16% to Rs2.84 billion despite the fall in revenue. In a business where raw cotton, yarn, power and gas can decide the difference between profits and losses, that was enough to transform the income statement.

The recovery was not without its blemishes. Operating expenses rose 11% to Rs626 million, which AKD attributed to higher export volumes. Finance costs rose even more sharply, by 27% to Rs1.24 billion, as a 31% increase in average borrowings outweighed the benefit of easing interest rates. That is the less flattering side of the company’s rebound: Nishat Chunian’s operations may have been rescued by cheaper inputs, but its balance sheet still carried the strain of an expensive working-capital cycle.