KSE-100 Index Companies Post Earnings of Rs. 403 Billion in 1QFY25

KSE 100 index companies posted earnings of Rs. 403 billion in 1QFY25 down 14 percent compared to Rs. 468 billion in 1QFY24, while up 16 percent on a quarter-on-quarter basis (QoQ).    In US dollar terms, profitability was recorded at $1.4 billion in 1QFY25, according to a report by brokerage house Topline Securities.    Topline said the YoY deviation in earnings was mainly contributed to by E&Ps (-21 percent YoY), Food (-15 percent YoY), and Refinery which turned into losses of Rs. 5.3 billion in 1QFY25 from a profit of Rs. 12.7 billion in 1QFY24.    The banking sector’s earnings remained flat on a YoY basis to Rs. 156 billion (39 percent of the total KSE-100 index profitability) in 1QFY25 despite a decline in interest rates.   Whereas, the profitability of the fertilizer sector increased by 16 percent YoY to Rs56bn (14 percent of total KSE-100 index profitability) in 1QFY25, amid higher Urea and DAP prices by 32 percent and 9 percent despite lower Urea and DAP offtake by 17 percent and 20 percent, respectively.   The cement sector’s earnings surged to Rs. 35 billion up 14 percent YoY in 1QFY25 mainly due to higher retention prices along with lower coal cost and efficient power mix despite lower local offtake.    The pharmaceutical sector witnessed a 5.6x YoY growth in profitability to Rs. 5.6 billion, compared to Rs. 1 billion in 1QFY24, primarily due to an improvement in margins following the deregulation of non-essential products and a decline in finance costs.   Other sectors like Refinery, OMCs, Textile, and E&Ps recorded a decline in earnings during 1QFY25 with a profitability decline of 142 percent YoY, 86 percent YoY, 60 percent YoY, and 21 percent YoY, respectively. The technology sector reported a loss of Rs 1.4 billion in 1QFY25 primarily led by losses of Pakistan Telecommunication Company (PTC).    The brokerage house pointed out that it took 95 companies out of the total 100 companies (that have announced their results), which represents 99 percent of KSE-100 market capitalization. We estimate that adding the remaining companies of the Index would not materially impact the profitability growth trend, it added.   KSE-100 index companies announced a cash dividend of Rs. 106 billion (+3 percent YoY) in 1QFY25 compared to Rs. 104 billion in 1QFY24.    This translates into a 26 percent dividend payout in 1QFY25 vs. 22 percent last year and 70 percent in 4QFY24.    The payout ratio of the E&Ps sector increased to 21 percent in 1Q2025, compared to 6 percent in 1Q2024, following an improvement in cash recovery of companies due to the increase in gas prices. The banking sector’s payout ratio also rose from 36 percent in 1Q2024 to 38 percent in 1Q2025.   The banking sector remained the largest contributor with a dividend of Rs. 59 billion in 1QFY25 followed by E&Ps (Rs. 18 billion), and Fertilizers (Rs. 6 billion).