IBL HealthCare Limited: performance and outlook

IBL HealthCare Limited (PSX: IBLHL) was incorporated in Pakistan as a private limited company in 1997. The company changed its status into a public limited company in 2009. The company is engaged in the marketing, selling and distribution of healthcare products. IBLHL is a wholly owned subsidiary of The Searle Company Limited (PSX: TSCL). Pattern of Shareholding As of June 30, 2025, the company has a total of 85. 675 million shares outstanding which are held by 5263 shareholders. The Searle Company Limited (SEARL), which is the holding company of IBLHL accounts for 70. 92 percent of its shares followed by local general public holding 16. 20 percent shares of IBLHL. The remaining shares are held by other categories of shareholders. Historical Performance (2021-25) Except for a year-on-year decline in 2024, IBLHL’s topline rode an upward trajectory over the period under consideration. Its bottomline picked up until 2023. In 2024, the bottomline drastically fell followed by a phenomenal recovery in 2025. IBLHL’s margins portray an asymmetrical pattern over the period under review. In 2021, IBLHL’s margins reached an unprecedented level. In the following year, gross margins slightly picked up while operating and net margins slid. In 2023 and 2024, IBLHL’s margins notably dropped followed by a recovery in 2025. The detailed performance review of the period under consideration is given below. In 2021, local as well as global economy hadn’t recovered from the shocks of COVID-19 which provided the pharmaceutical companies another year of robust sales growth. During the year, IBLHL added pharma and consumer products to its product portfolio which coupled with the existing portfolio mustered 12. 73 percent year-on-year growth in topline which was recorded at Rs. 3003. 909 million. The sale of high margin pharma products as well as the exemption of duties on nutrition and medical disposables resulted in a considerable 26 percent year-on-year growth in the gross profit of IBLHL during 2020. GP margin also climbed up to 34 percent during the year from 30. 45 percent in 2020. Other income slid by 39. 80 percent year-on-year in 2020 owing to lesser rental income on investment property and lesser interest income on loan to International Brands Limited. Operating expenses kept growing mainly on the heels of increased sales promotion and marketing drives as well as increase in salaries and wages. Induction of additional human resources drove up IBLHL’s workforce to 281 employees in 2021 from 262 employees in the previous year. The company boasted 26. 19 percent year-on-year growth in operating profit in 2021. OP margin grew to 14. 82 percent in 2021 from 13. 24 percent in 2020. The company obtained long-term financing under refinance scheme initiated by the SBP for the payment of wages and salaries. Moreover, running finances also grew during the period. However, low discount rate kept finance cost in check which dropped by 3. 41 percent year-on-year in 2021. The bottomline improved by 36. 57 percent year-on-year in 2021 to clock in at Rs. 300. 488 million with EPS of Rs. 4. 63. NP margin clocked in at 10 percent in 2021. This was against the EPS of Rs. 4. 07 and NP margin of 8. 26 percent recorded in 2020. In 2022, the company attained 21. 55 percent year-on-year growth in topline which clocked in at Rs. 3651. 125 million. This was mainly driven by the disposable business and nutrition portfolio. Despite sharp currency depreciation which increased the cost of sales for the company, better sales mix and revised pricing pushed its GP margin slightly up to clock in at 34. 41 percent in 2022. Gross profit multiplied by 22. 86 percent in 2022. The company made “other loss” worth Rs. 60. 105 million in 2022 as against “other income” posted in the previous years. This was mainly on account of exchange losses made during the year on the back of Pak Rupee depreciation. Inflationary pressure pushed operating expense up in 2022. Bigger workforce of 304 employees also resulted in higher payroll expense. Operating profit managed to post 16. 62 percent year-on-year growth in 2022, however, OP margin marginally slid to 14. 22 percent. Finance cost shrank during the year despite soaring discount rate as the company repaid the long-term loan obtained in 2021 under refinance scheme. The imposition of super tax enormously increased the tax expense for IBLHL and resulted in a paltry 0. 79 percent growth in its bottomline in 2022. The net profit of the company stood at Rs. 302. 859 million in 2022 with NP margin slipping to 8. 3 percent. EPS clocked in at Rs. 4. 24 in 2022. IBLHL’s topline grew by 10. 32 percent year-on-year in 2023 to clock in at Rs. 4027. 874 million. This was on the back of improved performance of medical devices and nutritional business. High cost of sales on the back of increase in supplier prices, Pak Rupee depreciation, elevated energy charges and high inflation pushed up cost of sales by 12. 22 percent in 2023. Gross profit inched up by 6. 70 percent in 2023, however, GP margin ticked down to 33. 28 percent. The company’s other loss multiplied by 41. 60 percent in 2023 due to higher exchange loss. Marketing expense grew by 8. 43 percent year-on-year in 2023 on the back of higher payroll expense of sales force. The company didn’t enhance its sales promotion and marketing budget during the year. Operating profit ticked up by 1 percent in 2023 with OP margin falling down to 13 percent. Finance cost surged by 140. 66 percent in 2023 due to unprecedented level of discount rate coupled with increased short-term borrowings obtained during the year. IBLHL’s bet-to-equity ratio surged to 69 percent in 2023 from 57 percent in 2022. Net profit grew by 2 percent year-on-year in 2023 to clock in at Rs. 308. 963 million with EPS of Rs. 3. 610 and NP margin of 7. 67 percent. In 2024, IBLHL’s net sales plunged by 10. 54 percent to clock in at Rs. 3603. 359 million. Due to high cost of sales on account of inflationary pressure, Pak Rupee depreciation and elevated energy tariff, the company had to revise the prices of its nutritional and infant portfolios. This considerably squeezed the sales volume in these two categories. Cost of sales slid by only 1. 34 percent in 2024, resulting in 29 percent slump recorded in gross profit. GP margin descended to its lowest level of 26. 41 percent in 2024. Unlike past two years, in 2024, the company posted other income to the tune of Rs. 32. 84 million. This was on account of exchange gain recorded during the year as against exchange loss recorded in the previous year. Rental income from investment property also rebounded in 2024. Selling expense mounted by 9. 88 percent in 2024 due to higher budget allocated for sales promotion activities coupled with increased salaries of sales force as well as higher freight & cartage charges incurred during the year. Administrative expense escalated by 5. 34 percent in 2024. While the payroll expense dropped during the year as the company streamlined its workforce from 311 employees in 2023 to 292 employees in 2024, higher administrative expense was the result of elevated IT support & maintenance charges incurred during the year. IBLHL’s operating profit deteriorated by 64. 51 percent in 2024 with OP margin slipping to 5. 17 percent. Finance cost ticked up by 2. 52 percent in 2024 due to higher discount rate. This was despite the fact that the company paid off a huge portion of its short-term liabilities during the year which squeezed its debt-to-equity ratio to 57 percent in 2024 from 69 percent in the previous year. Net profit dwindled by a massive 97. 55 percent to clock in at Rs. 7. 555 million in 2024. This translated into EPS of Rs. 0. 09 and NP margin of 0. 21 percent. In 2025, IBLHL’s net sales strengthened by 19. 96 percent to clock in at Rs. 4322. 471 million. This came on the back of robust sales volume, efficient sales mix and price optimization achieved during the year. Medical and surgical disposables which form the highest proportion of the sales mix of IBLHL recorded 16 percent growth to clock in at Rs. 2045. 794 million in 2025. This was followed by nutrition segment posting 15. 94 percent growth to clock in at Rs. 1655. 25 million. Sweetener & beverages segment which has the lowest share in the sales mix of IBLHL registered a massive 50. 93 percent growth to clock in at Rs. 621. 430 million in 2025. Cost of sales mounted by 8. 45 percent in 2025, resulting in 52 percent growth recorded in gross profit. GP margin also improved to 33. 48 percent. The company recorded other loss of Rs. 7. 28 million in 2025 versus other income of Rs. 32. 84 million recorded in 2024. This was due to exchange loss recorded during the year. Greater sales volume and increased marketing and promotional activities to pitch sales resulted in 23. 75 percent spike in distribution expense in 2025. Administrative expense hiked by 37. 36 percent in 2025 due to higher payroll expense on account of inflationary pressure. This was despite the fact that the company further rationalized its workforce from 292 employees in 2024 to 224 employees in 2025. IBLHL recorded 134. 86 percent higher operating profit in 2025 with OP margin clocking in at 10. 12 percent. Finance cost slid by 10. 66 percent in 2025 due to lower discount rate. This was despite greater running finance facilities utilized during the year. Debt to equity ratio surged to its highest level of 73 percent in 2025. IBLHL registered net profit of Rs. 208. 371 million in 2025, up 2658 percent year-on-year. This translated into EPS of Rs. 2. 43 and NP margin of 4. 82 percent. Recent Performance (9MFY26) During the nine-month period of the ongoing fiscal year, IBLHL’s topline ticked up by 5. 10 percent to clock in at Rs. 3304. 785 million. While gross sales dipped during the period, lesser sales tax, sales return and sales discount resulted in improved net sales in 9MFY26. This was the result of the company’s prudent strategy of improved sales mix as well as selective pricing and procurement. Cost of sales tumbled by 4. 48 percent in 9MFY26 as the company focused on profitable portfolio and traded off sales volumes with sales mix optimization. This resulted in 26 percent higher gross profit in 9MFY26 with GP margin clocking in at 37. 67 percent versus GP margin of 31. 42 percent recorded in 9MFY25. IBLHL posted other income of Rs. 8. 615 million in 9MFY26 versus other expense of Rs. 1. 38 million registered in 9MFY25. This was due to exchange gain recorded during the period under review versus exchange loss recorded in the comparable period of last year. Rental income from investment property also rebounded during 9MFY26. Inflationary pressure coupled with the company’s continued investment in channel expansion, market coverage and brand development resulted in 28. 16 percent hike in distribution expense and 39 percent spike in administrative expense in 9MFY26. IBLHL recorded 20. 76 percent greater operating profit in 9MFY26 with OP margin clocking in at 11 percent versus OP margin of 9. 60 percent recorded in 9MFY25. Finance cost tapered off by 33 percent in 9MFY26 despite increased borrowings. This was due to monetary easing. Net profit strengthened by 23. 63 percent to clock in at Rs. 167. 485 million in 9MFY26. This translated into EPS of Rs. 1. 70 and NP margin of 5. 10 percent in 9MFY26 versus EPS of Rs. 1. 37 and NP margin of 4. 31 percent posted in 9MFY25. Future Outlook The company has been actively focusing on its lucrative segments to enhance its margins and profitability. The company is also undertaking localization to reduce its cost. Besides, it is also eyeing export markets to diversify its geographical mix and ensure profitable growth.

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