TRG Pakistan Limited: performance and outlook

TRG Pakistan Limited (PSX: TRG) was incorporated in Pakistan as a public limited company in 2002. The company obtained license from SECP to perform as a Non-Banking Finance Company and undertake venture capitalist investment. The company is engaged in investments particularly in Technology, medical insurance and IT enabled services through its associate, The Resource Group International Limited (TRGIL). Pattern of Shareholding As of June 30, 2025, TRG has a total of 545. 391 million shares outstanding which are held by 13, 411 shareholders. Local general public has the majority stake of 36. 97 percent in the company followed by associated companies holding 36. 20 percent shares. Around 8. 87 percent of TRG’s shares are held by foreign general public and 5. 295 percent by Banks, DFIs and NBFIs. The remaining shares are held by other categories of shareholders. Financial Performance (2019-25) Except for year-on-year rise in 2019 and 2024, TRG’s topline descended over the period under consideration. TRG recovered from net loss in 2019 and recorded tremendous bottomline growth for the subsequent two years. The company began posted net losses yet again from 2022 to 2024. In 2025, TRG posted net profit. The detailed performance review of the period under consideration is given below. In 2019, TRG’s topline which comprises of interest income posted year-on-year rise of 5. 45 percent to clock in at Rs240. 97 million. As of June 30, 2019, TRG’s investment in TRGIL stood at Rs. 16. 4 billion versus Rs. 16. 1 billion in June 2018, representing year-on-year increase of 1. 86 percent. The rise in interest income represents interest income on loan granted to TRG (Private) Limited, an indirect subsidiary of TRG for working capital as well as operational requirements. Lower exchange loss of Rs. 2. 45 million incurred during the year versus exchange loss of Rs. 222 million in 2018, resulted in 46. 44 percent year-on-year decline in administrative expense during the year. As a consequence, TRG was able to record operating profit of Rs. 2. 39 million in 2019 versus operating loss of Rs. 216. 92 million posted in 2018. OP margin stood at 1 percent in 2019. TRG recorded net profit of Rs. 1. 855 million in 2019 versus net loss of Rs. 217. 54 million in 2018. EPS stood at Rs. 0. 003 in 2019 versus loss per share of Rs. 0. 0399 recorded in 2018. NP margin stood at 0. 8 percent in 2019. In 2020, TRG’s interest income dropped by 1. 57 percent year-on-year to clock in at Rs. 237. 18 million. TRG’s investment in TRGIL as of June 30, 2020 stood at Rs. 21. 8 billion, up 32. 93 percent year-on-year. The drop in interest income was due to maturity of loan amount granted to TRG (Private) Limited in November 2020. Administrative & other expenses also dropped by 1. 73 percent in 2020 due to lower management fee and exchange loss. As a consequence, TRG recorded operating profit of Rs. 2. 74 million in 2020, up 14. 46 percent year-on-year. This translated into OP margin of 1. 2 percent in 2021. During the year, TRG also recorded share of profit of Rs. 86. 95 million in equity accounted investee i. e. TRGIL. This culminated into net profit of Rs. 76. 165 million in 2020, up 4005. 93 percent. TRG recorded EPS of Rs. 0. 14 and NP margin of 32. 1 percent in 2020. TRG’s interest income fell by 34. 88 percent year-on-year to clock in at Rs. 154. 44 million in 2021. During the year, TRG’s share in TRGIL rose to Rs. 49. 6 billion, up 127. 5 percent year-on-year. The plunge in interest income was mainly on account of lower interest income earned on loans granted to related parties due to monetary easing and also because all the outstanding loans were settled during the year. Interest income on bank balances staggeringly grew during the year as TRG’s cash & bank balances posted robust growth of 180 times in 2021 to clock in at Rs. 598. 429 million. Administrative and other expenses shrank by 86. 20 percent in 2021 as no exchange loss was incurred during the year due to appreciation in the value of local currency. Furthermore, management fee charged under managerial services agreement with TRGIL also dropped to Rs. 15 million in 2021 from Rs. 210 million in 2020. As a result, TRGIL posted operating profit of Rs. 122. 09 million in 2021 with OP margin climbing up to 79 percent. TRG also recorded share of profit Rs. 30, 312. 64 million in equity accounted investee i. e. TRGIL, up 348 times year-on-year. After accounting for taxation (primarily deferred tax liabilities), TRG recorded net profit of Rs. 25, 852. 43 million in 2021 with EPS of Rs. 47. 4 and NP margin of 16739 percent. In 2022, TRG’s topline further eroded by 94. 5 percent year-on-year to clock in at Rs. 8. 55 million. As loans to related parties were settled in the previous year, TRG’s interest income comprised of interest earned on bank deposits which also drastically shrank despite high discount rate as the company’s cash and bank balances stooped to Rs. 34. 884 million in 2022, down 94. 2 percent year-on-year. Administrative and other expense mounted by 43. 30 percent year-on-year in 2022 on account of higher exchange loss as well as other miscellaneous expenses incurred during the year. This translated into operating loss of Rs. 37. 82 million in 2022. As against past two years where TRG recorded share of profit in equity accounted investee, in 2022, the company registered share of loss of Rs. 14, 732. 07 million in equity accounted investee i. e. TRGIL. During the year, TRGIL shareholders redeemed their preference shares in exchange for cash and shares of a portfolio company held by TRGIL. The difference between the redemption value and original share prices was recorded by TRGIL as one-time non-cash charge. Moreover, TRGIL also incurred mark-to-market loss on IBEX shares as the share price of IBEX on NASDAQ plummeted by 14 percent in 2022. The share of loss on equity accounted investee was partially offset by dilution gain of Rs. 8, 863. 69 million in equity accounted investee as due to the redemption of preference shares, TRG’s equity holding in TRGIL increased without change in the company’s investment. As of June 30, 2022, TRG’s share in TRGIL stood at Rs. 56. 7 billion, up 14. 3 percent year-on-year. TRG also recorded other income of Rs. 23. 1 million on account of partial waiver granted by TRGIL on the balance of USD 173, 517 payable to them as at June 30, 2021. Tax of Rs. 902. 4 million was reversed during the year. Yet, TRG posted net loss of Rs. 4980. 726 million in 2022 with loss per share of Rs. 9. 132. TRG recorded topline contraction of 88. 86 percent in 2023. This resulted in interest income of 0. 95 million in 2023. TRG’s interest income represented interest recognized on bank deposits. Administrative and other expense surged by 314. 48 percent in 2023 due to higher exchange loss and miscellaneous expenses incurred during the year. Operating loss was recorded at Rs. 191. 22 million in 2022, up 405. 65 percent year-on-year. Share of loss in equity accounted investee stood at Rs. 1350. 36 million in 2022, down 90. 8 percent year-on-year. While TRGIL recorded mark-to-market gain on IBEX shares as their value on NASDAQ increased by 26 percent during the year, it was offset by loss emanating from revaluation of TRGIL’s share in the AI software company coupled with operating expense incurred by TRGIL in 2023. Despite reversing tax of Rs. 205. 53 million, TRG posted net loss of Rs. 1336. 046 million in 2023, down 73. 2 percent year-on-year. Loss per share stood at Rs. 2. 45 in 2023. In 2024, TRG’s topline (interest income) grew by 169. 12 percent year-on-year to clock in at Rs. 2. 56 million. This represented interest income on conventional bank deposits. Administrative & other expenses mounted by 71. 67 percent in 2024. TRG recorded operating loss of Rs. 327. 35 million in 2024, up 71. 19 percent year-on-year. Share of loss in equity accounted investee i. e. TRGIL escalated by a drastic 2559 percent in 2024. The increase in the share of loss was on account of revaluation of TRGIL’s stake in the AI Software business due to debt restructuring of the latter. TRGIL also incurred mark-to-market loss on IBEX shares. As of June 30, 2024, TRG’s stake in TRGIL stood at Rs. 40, 544. 488 million, down 92. 52 percent year-on-year. The decrease in share was due to net loss incurred by TRGIL during the year and also because of appreciation in the value of Pak Rupee. Tax amounting to Rs. 5386. 02 million was reversed during the year on account of deferred taxes. TRG recorded net loss of Rs. 30, 848. 100 million in 2024, up 2208. 91 percent year-on-year. This translated into loss per share of Rs. 56. 56 in 2024. 2025 was encouraging for TRG as it was able to post net profit after three successive years. Interest income slid by 23. 97percent to clock in at Rs. 1. 95 million in 2025. This was due to monetary easing and a slide in the company’s cash & bank balances during the year. Administrative & other expense mounted by 65. 78 percent in 2025 due to exchange loss incurred during the year versus exchange gain recognized in the previous year. TRG recorded operating loss of Rs. 544. 98 million in 2025, up 66. 48 percent year-on-year. What proved to be the game changer for TRG was the performance of its sole operating asset i. e. TRGIL. Unlike share of loss of Rs. 35, 906. 76 million recorded in the equity accounted investee (TRGIL) in 2024, TRG recorded share of profit of Rs. 5258. 97 million in TRGIL in 2025. This was due to selling of 3. 56 million shares of IBEX via share purchase transaction conducted by IBEX at market price. As of June 30, 2025, TRG’s stake in TRGIL was recorded at Rs. 46. 7 billion versus Rs. 40. 5 billion at the end of last year. This was due to net profit recorded by TRGIL during the year. Owing to better performance of its sole operating asset (TRGIL), TRG posted net profit of Rs. 3923. 985 million in 2025 versus net loss of Rs. 30, 848. 100 million recorded in 2024. EPS was recorded at Rs. 7. 19 in 2025 versus loss per share of Rs. 56. 56 recorded in 2024. Recent Performance (1HFY26) During the first half of the ongoing fiscal year, TRG’s interest income deteriorated by 35. 56 percent to clock in at Rs. 0. 732 million. This was due to monetary easing as well as a downtick recorded in the liquidity position of the company during the period. Administrative and other expenses also slid by 3. 38 percent in 1HFY26 likely due to lower exchange loss. TRG posted operating loss of Rs. 272. 16 million in 1HFY26, down 3. 25 percent year-on-year. Share of profit in equity accounted investee – TRGIL – slid by 1. 70 percent to clock in at Rs. 5316. 01 million in 1HFY26. This comprised of mark-to-market gain booked by TRGIL on IBEX shares. As of December 31, 2025, TRG’s share in TRGIL was recorded at Rs. 51. 4 billion versus its share of Rs. 46. 7 billion as of June 30, 2025. After accounting for taxation, TRG registered net profit of Rs. 4246. 44 million, down 1. 58 percent year-on-year. This translated into EPS of Rs. 7. 79 in 1HFY26 versus EPS of Rs. 7. 91 recorded in 1HFY25. Future Outlook The value of TRG’s assets is contingent upon its investment in its sole operating asset TRGIL which in turn is dependent upon the value of IBEX and AI software business (Afiniti). IBEX has been gaining new client relationships in sectors such as HealthTech, FinTech, and Retail & E-commerce etc as a result of increased investments in business development efforts. Afiniti is also making tireless efforts to add new customers, increase operational efficiency, refine its go-to-market sale strategies and commercialize newly developed products. Afiniti has also recently completed its debt restructuring following court approvals in Bermuda and proceedings in the US. With lesser current senior debt and a multi-year debt maturity extension, the entity will be able to focus more on its growth and its go-to-market strategy, indirectly adding value to TRG.

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