- Earnings rose 13%YoY, dividend payouts were up 22%
The KSE-100 index companies posted earnings of PKR458 billion in 1QFY26, from PKR407 billion in 1QFY25 up 13%YoY. In US dollar terms, profitability stood at US$1.6 billion. Excluding E&Ps and banks, profits were up 27% YoY.
Despite a decline in interest rates, the banking sector’s earnings increased by 7%YoY to PKR164 billion in 1QFY26. This growth was driven by an increase in Net Interest Income (NII) and reversals instead of provisioning. Earnings were up 2% QoQ due to lower effective tax rate.
The E&P sector posted a 7%YoY and 4%QoQ decline in profitability during 1QFY26 to PKR79.8 billion. The YoY decline was driven by lower hydrocarbon output amid gas curtailment, with oil and gas production falling 5%YoY and 7% YoY, respectively, during the quarter. On a QoQ basis, the fall in earnings was due the normalization of effective tax rate and exchange losses as a result of PKR appreciation.
Fertilizer sector’s profitability went up by 8%YoY and 17%QoQ to PKR42.3 billion, largely driven by higher volumetric sales during the quarter.
Cement sector earnings witnessed a 21%YoY growth to PKR41.9 billion in 1QFY26, led by a 14%YoY increase in domestic dispatches and a 21% increase in export volumes. However, lower retail prices in North amongst others resulted in a 1%QoQ decline in profitability.
The automobile sector reported an increase of 23%YoY in 1QFY26, driven by a 53%YoY increase in passenger car sales on the back of new variant launches and improving purchasing power. While. QoQ growth remained modest at 3%, owing to a 50% decline in tractor sales amid floods.
Food and personal care sector’s profitability increased 9%YoY during the quarter to PKR14.1 billion, supported by lower inflation and interest rates. On a sequential basis, earnings declined 7% due to lower margins.
OMCs recorded a 108%YoY and 58%QoQ surge in profitability to PKR13.2 billion, owing to inventory gains and higher volumetric sales.
The pharmaceutical sector posted a 20%YoY and 43%QoQ increase in earnings during 1QFY26, mainly due to expanding gross margins.
Within other sectors, Power (46%), Refinery (15%) and Chemicals (16%) reported earnings declines during 1QFY26.
In contrast, Technology, Engineering and Textiles posted growth primarily due to the low base effect.
On a sequential basis, KSE-100 index earnings witnessed a growth of 3%QoQ. For analysis, the brokerage house has taken 92 companies out of the total 100 companies (that have announced their results), which represents 97% of KSE-100 market capitalization. The brokerage house believes that adding the remaining companies of the index would not materially impact profitability growth trend.
Banks and E&Ps largest dividend payers
He KSE-100 index companies announced cash dividends of PKR154 billion in 1QFY26 as against PKR127 billion in 1QFY25, up 22%YoY.
This translates into a 34% dividend payout in 1QFY26 as compared to 31% for the same period last year. On a QoQ basis, dividends were down 43%, as most of the entities distribute payouts on an annual or half-yearly basis, typically in the June and December quarters.
Despite a 5% YoY decline in dividends, the banking sector remained the largest contributor with payout of PKR70 billion in 1QFY26 followed by E&Ps (PKR21 billion), and Fertilizers (PKR20 billion).
United Bank (UBL), Meezan Bank (MEBL) and MCB Bank (MCB) were the top contributors in the sector, with payouts of PKR20.0 billion, PKR12.5 billion, and PKR10.7 billion, respectively.
Within the E&P sector, Oil & Gas Development Company (OGDC) announced dividends of PKR15.1 billion, while Pakistan Petroleum (PPL) declared PKR 5.4 billion.
In the fertilizer space, Fauji Fertilizer (FFC) and Engro Fertilizers (EFERT) announced payouts of PKR13.5 billion and PKR6.0 billion, respectively.
In the automobile sector Atlas Honda (ATLH) was the leader with PKR5.7 billion dividends, followed by Indus
Motors (INDU) at PKR4.0 billion, and Sazgar (SAZEW) at PKR907 million.
With in Food & Personal Care companies National Foods (NATF) was the largest contributor with PKR4.2 billion, while Nestle Pakistan (NESTLE) declared dividends of PKR3.5 billion.
With in cement sector, Bestway Cement (BWCL) was the sole contributor, with a payout of PKR5.9 billion.
In the power Hub Power Company (HUBCO) declared a dividend of PKR6.5 billion during the quarter.
Within Pharmaceuticals, Haleon Pakistan announced a payout of PKR585 million, while in the Technology sector, Air Link Communication (AIRLINK) declared its first ever interim dividend of PKR791 million.