Ayesha Mudassar

The net sales of Interloop Limited (ILP) grew by 39.5%, the gross profit by 64.4% and the net profit by 91.1% in the first six months (July-December) of the ongoing fiscal year (6MFY24) compared to the corresponding period of the previous year, WealthPK reports. Thanks to economic stability and demand restoration, the textile giant earned Rs73.8 billion in revenue and Rs22.4 billion in gross profit in 6MFY24. The net profit stood at Rs9.02 billion compared to Rs5.5 billion in the corresponding period last year, resulting in an earnings per share (EPS) of Rs6.44 versus Rs3.27 in 6MFY23.

The company's other income shot up by 2,115% to reach Rs332 million compared to only Rs15 million in 6MFY23. The improved performance reflects the company's focus on customer relationship, operational efficiency and effective cost-control measures.

Sector performance during 6MFY24

The textile and apparel exports posted a modest recovery of 3.3% year-on-year owing to the demand stabilisation in the US and European markets. In addition, the cotton crop experienced bumper output this year, with arrivals crossing eight million bales until December 2023, up 63% YoY.

Historical financials

The sales and net profit of ILP kept growing significantly from 2020 to 2023. Nonetheless, the company performed remarkably well during FY23 and delivered exceptional results by achieving the highest-ever sales revenue of Rs119.2 billion compared to Rs90.8 billion in FY22. Moreover, the company achieved the highest profit-after-tax of Rs20.1 billion in FY23, reflecting an increase of 63% compared to Rs12.3 billion in FY22. This notable improvement in profitability was primarily due to cost-saving initiatives and better pricing management. The greater profit resulted in earnings per share of Rs14.39 in FY23 compared to Rs8.82 in FY22.

Historical ratios

The historical ratios of Interloop Limited provide valuable insights into the company's financial performance and growth patterns over the years. It showcased a consistent improvement in its gross profit margin, reaching 33.45% in FY23, up from 28.68% in FY22, 25.86% in FY21 and 21.66% in FY22. This steady upward trend reflects the company's effective cost management and pricing strategies, contributing to a healthier bottom line. The net profit margin for Interloop also experienced positive growth, rising to 16.92% in FY23 from 13.60% in FY22, 11.45% in FY21 and 4.95% in FY20. The upward trajectory in net profit margin is a positive signal for investors, demonstrating Interloop’s success in managing expenses and maximising profits.

Concerning EPS, Interloop Limited reported a significant growth of 63.15% in FY23. This follows a 26% growth in FY22 and an outstanding 239.81% surge in FY21. The consistent rise in EPS highlights the company’s capacity to generate value for its shareholders, reflecting a strong financial performance. During the years under consideration, the price/earnings to growth (PEG) ratio for the company was notably low at 0.04 in FY23. The PEG ratio assesses the relationship between a company's price/earnings (P/E) ratio and its earnings growth rate. A PEG ratio below 1 suggests that the stock may be undervalued relative to its earnings growth potential.

About the company

Established in 1992, Interloop was listed on Pakistan Stock Exchange in 2019. The company is a vertically integrated, multi-category company that manufactures hosiery, denim, knitted apparel and activewear. In addition, it produces yarn for textile customers.

Credit: INP-WealthPk