Karachi, February 27, 2024 – The KSE-100 index of the Pakistan Stock Exchange (PSX) has witnessed an extraordinary surge in profitability, marking a remarkable 51% year-on-year (YoY) growth in CY23, according to analysts at Arif Habib Limited.
This unprecedented level of profitability is a testament to the robust performance of various sectors within the market. The banking sector took the lead with an impressive 82% YoY growth, reaching PKR 550 billion, attributed to elevated interest rates that boosted net interest income.
Oil and Gas Exploration (E&Ps) followed closely with a 60% YoY growth, amounting to PKR 480 billion in CY23. Factors contributing to this surge include currency depreciation, taxation reversal on depletion allowance, and exchange gains during the period.
The Fertilizer sector experienced a substantial 47% YoY growth, reaching PKR 94 billion, driven by a 50% increase in urea prices and a 31% surge in DAP sales.
Cement industry profitability surged by 38% YoY to PKR 100 billion, despite a slight volumetric decline (-1% YoY). Higher retention prices and lower coal prices offset the impact of energy tariff hikes and currency depreciation.
The Chemical sector recorded a 34% YoY increase in earnings, amounting to PKR 48 billion. This growth was primarily attributed to a one-off gain from Lucky Core Industries Limited due to the sale of NutriCo Morinaga.
The Power sector witnessed a significant 55% YoY growth, with a net profit of PKR 77 billion. HUBC played a crucial role in this expansion, driven by the addition of local coal-based plants, increased profit share from associates and joint ventures, and PKR depreciation.
Auto Assemblers reported a 72% YoY increase in bottom-line, settling at PKR 20 billion, attributed to a low base and improved margins due to higher prices of passenger vehicles and tractors.
Refineries experienced an 8% YoY growth in net profit, reaching PKR 26 billion, mainly owing to inventory gains.
Engineering (Steel) sector profitability saw an impressive 186% YoY growth to PKR 14 billion, led by ISL and INIL, amid better sales and margins.
Food and Personal Care sectors recorded a 6% YoY increase in earnings, amounting to PKR 22 billion, driven by higher sales and improved margins.
The analysis is based on the KSE-100 index and includes results from 72 companies, representing approximately 83.4% of the benchmark bourse’s market capitalization. The diverse performance across sectors highlights the resilience and adaptability of the Pakistani stock market in the face of various economic dynamics. Investors and stakeholders continue to closely monitor these trends for potential opportunities in the evolving market landscape.
