Gammon Pakistan Limited

Gammon Pakistan Limited (PSX: GAMON) was incorporated in Pakistan as a public limited company in 1947. The principal activity of the company is the execution of civil construction works particularly bridges and buildings. Bibojee Services (Private) Limited is the holding company of GAMON. Pattern of Shareholding As of June 30, 2025, GAMON has a total of 28. 266 million shares outstanding which are held by 2315 shareholders. Bibojee Services (Private) Limited (the holding company) has the majority stake of 72. 06 percent in the company followed by local general public holding 26. 78 percent shares. The remaining shares are held by other categories of shareholders. Historical Performance (2021-25) GAMON’s topline contracted over the period under consideration. In 2024 and 2025, the company recorded no contract income. Its bottomline also shrank until 2021 where it posted net loss. The net loss slid in 2022. In 2023 and 2024, the company registered net profit followed by net loss in 2025. The detailed performance review of the period under consideration is given below. GAMON’s contract income further plummeted by 59 percent in 2021 to clock in at Rs. 75. 717 million. This was because the economy was still grappling against the shocks of the global pandemic COVID-19. The government announced incentives and packages for the construction industry; however, GAMON strived to attain direct projects at favorable rates. While lesser projects obtained during the year resulted in significantly lower salaries expense and material cost incurred during the year, it was partially offset by greater impairment booked on stores, spares and loose tools in 2021. Hence, contract expenditure slipped by a relatively lower magnitude and the company registered net contract loss of Rs. 23. 28 million in 2021. General & administrative expenses surged by 19. 38 percent in 2021 due to higher payroll expense, hefty repair & maintenance charges, rent, rates & taxes as well as greater provisioning booked for loans & advances. Other expense which was lesser than 1 million in the past years swelled by 2738 percent to clock in at Rs. 17. 596 million in 2021 due to bills receivable, loans & advances, retention money and security deposit written off during the year. Other expense was conveniently offset by 193 percent stronger other income recorded in 2021 which was the result of robust gain on the sale of obsolete fixed assets, stores & spares, higher rental income on investment property and sundry creditors written back during the year. Operating loss mounted by 293. 97 percent to clock in at Rs. 25. 109 million in 2021. Bank charges escalated by 9. 71 percent in 2021. Fair value gain on investment property fell by 55. 62 percent in 2021. GAMON registered net loss of Rs. 8. 103 million in 2021 with loss per share of Rs. 0. 29. This was against the net profit of Rs. 26. 211 and EPS of Rs. 0. 93 posted in the previous year. In 2022, GAMON’s contract income recorded a fall of 67. 86 percent to clock in at Rs. 24. 332 million. This was on account of political and economic uncertainty which resulted in slow disbursement of PSDP funds along with no new announcement of new projects. Contract expenditure fell by 73. 49 percent in 2022, resulting in 91. 80 percent decline in net contract loss which clocked in at Rs. 1. 909 million. Number of employees grew from 20 in 2021 to 22 in 2022 which resulted in higher payroll expense; however it couldn’t drive the administrative expense up in the absence of provisioning for loans and advances. Hence, administrative expense shrank by 34. 73 percent in 2022. Other expense escalated by 123. 12 percent in 2022 due to contracts assets written off during the year. Other income grew by 3. 11 percent in 2022 on account of a massive rise in sundry creditors written back during the year. Rental income from investment properties also contributed in driving other income up in 2022. GAMON’s operating loss thinned down by 68. 37 percent in 2022 to clock in at Rs. 7. 942 million. Bank charges also stayed the same at last year’s level. Fair value gain on investment property dropped by 61. 26 percent in 2022. GAMON recorded profit before tax worth Rs. 1. 03 million in 2022; however, tax expense of Rs. 7. 398 million resulted in net loss of Rs. 6. 368 million, down 21. 41 percent year-on-year. Loss per share stood at Rs. 0. 23 in 2022. In 2023, GAMON’s topline slid by 72. 56 percent to clock in at Rs. 6. 678 million. This was due to precarious economic and political backdrop which impeded the announcement of PSDP projects. The situation was further aggravated by heavy floods which took its toll on the infrastructure of the country’s southern region. While the cost of materials consumed and salaries disbursed significantly fell in 2023, higher cartage, travelling & conveyance charges incurred during the year resulted in contract expenditure shrinking by a lower magnitude of 35. 96 percent in 2023. Net contract loss magnified by 430. 25 percent to clock in at Rs. 10. 126 million in 2023. General & administrative expense inched up by 4. 25 percent in 2023 which was mainly the consequence of higher rent, rates & taxes paid during the year. The company right-sized its workforce to 19 employees in 2023. 91. 53 percent year-on-year decline in other expense in 2023 was due to high-base effect as hefty amount of contract assets were written off in the previous year. Other income tapered off by 26. 77 percent in 2023 mainly due to lesser sundry creditors written back during the year. GAMON posted operating profit of Rs. 1. 799 million in 2023 with OP margin of 26. 94 percent – the highest during the period under consideration. Fair value gain on investment property nosedived by 74. 20 percent in 2023. GAMON posted net profit of Rs. 7. 547 million in 2023 with EPS of Rs. 0. 27 and NP margin of 113. 02 percent. In 2024, the company didn’t gain any project resulting in zero contract revenue. This was due to poor market demand and political instability in the country. No significant PSDP project was announced by the government during the year. During the year, the company was struggling to recover the receivable of its two projects – Maritime Technologies Complex at Fateh Jang and the project of Old Bannu Road Structure Bridges. This resulted in cash flow constraints for the company. Contract expenditure also declined by 94. 52 percent during the year resulting in net contract loss of Rs. 0. 921 million, down 90. 91 percent year-on-year. Elevated utility charges and an upsurge in inflation resulted in 11. 27 percent higher administrative expense in 2024. GAMON streamlined its workforce from 19 employees in 2023 to 17 employees in 2024. Other expense dropped by 77. 59 percent in 2024 due to high-base effect as the company wrote off loans & advances as well as long-term security deposit in the previous year. Other income also thinned down by 23. 23 percent in 2024. This was because the company wrote back sundry creditors, accrued expenses, dues to sub-contractors and employees payable in the previous year. Moreover, thinner rental income, gain on sale of obsolete stores & spares and no provision reversed in 2024 also contributed in driving down other income in 2024. Operating loss shrank by 126. 82 percent to clock in at Rs. 0. 482 million in 2024. Fair value gain on investment property increased by 48. 24 percent in 2024. However, GAMMON transferred its investment property to its subsidiary GAMMON Precast (Private) Limited against the issue of shares for the purpose of increasing its investment in the subsidiary. The company recorded 28. 14 percent decline in its pretax profit which stood at Rs. 2. 955 million in 2024. However, deferred tax impact resulted in 464. 88 percent stronger net profit to the tune of Rs. 42. 632 million in 2024. This translated into EPS of Rs. 1. 51 in 2024. Just like last year, in 2025, GAMON didn’t get any project, resulting in no contract revenue. This was due to challenging conditions of Pakistan’s infrastructure and construction industry with no significant public sector development as well as laggard private sector investment. This was despite the positive development seen in the macroeconomic indicators in FY25. During this period of muted growth, the company focused on settling receivables from its earlier projects and participated in multiple bidding projects. The company also sold off its Hyderabad plots for Rs. 155 million to settle its outstanding liabilities. A considerable amount was also granted to Gammon Pakistan Precast (Private) Limited as an interest bearing loan. Some amount was also utilized for the renovation of Gammon House building to enhance its rental potential and commercial value. Contract expenditure tapered off by 23. 26 percent in 2025 which comprised of only depreciation expense. This resulted in gross loss of Rs. 0. 707 million, down 23. 26 percent year-on-year. General & administrative expense mounted by 90. 54 percent in 2025 on the back of other sundry expense, rent, rates and taxes, repair & maintenance and travelling expense. Other expense also hiked by a massive 5078 percent in 2025 due to loss incurred on the sale of operating fixed assets. Unlike the past few years, other income couldn’t offset the company’s operating and other expense despite recording 50. 65 percent growth in 2025. The growth in other income was the result of rental income in investment property, mark-up on advances to subsidiary, gain on sale of obsolete inventory and miscellaneous income. Enormous operating and other expense resulted in a huge 10486 percent spike in operating loss which clocked in at Rs. 51. 063 million in 2025. GAMON recorded the highest operating loss in 2025. Finance cost (bank charges) surged by 48. 48 percent in 2025. Fair value gain on investment property (the company’s head office) recorded 123. 57 percent growth in 2025. The company recorded net loss of Rs. 63. 805 million and loss per share of Rs. 2. 26 in 2025. Recent Performance (9MFY26) During the nine-month period of the ongoing fiscal year, GAMON recorded no contract revenue for the third consecutive year as no new project was secured. This reflects the challenging conditions of the country’s construction industry as well as the company’s tighter liquidity conditions and its inability to obtain running finance to participate in the bidding process of huge projects. Contract expenditure which largely comprised of depreciation expense surged by 121. 82 percent in 9MFY26, resulting in net contract loss of Rs. 0. 86 million, up 121. 82 percent year-on-year. Operating and other expense surged by 26. 10 percent in 9MFy26 which was in line with inflationary pressure. The expense was offset by other income of Rs. 43. 34 million recorded in 9MFY26, up 60. 40 percent year-on-year. Higher other income was due to improved rental income as the company renovated its building in 2025. Superior other income and contained operating expense enabled the company to record operating profit of Rs. 5. 13 million in 9MFY26 versus operating loss of Rs. 2. 98 million registered in 9MFY25. Bank charges also tapered off by 42. 26 percent in 9MFY26. The company recorded profit before tax of Rs. 5. 13 million in 9MFY26 versus loss before tax of Rs. 2. 99 million posted in 9MFY25. Elevated tax charges dragged the company’s bottomline into the negative zone with net loss of Rs. 0. 633 million in 9MFY26, down 92. 18 percent year-on-year. This translated into loss per share of Rs. 0. 02 in 9MFY26 versus loss per share of Rs. 0. 29 recorded in 9MFY25. Future Outlook The company is facing liquidity constraints due to its outstanding receivables which include tax refunds from the government, loan & advances to related parties, contract receivables, contract assets and receivables in respect of rental income. Lack of sufficient working capital and working experience for the past five years has rendered the company unable to participate in government tenders. Hence, the company is now focusing on becoming a developer emphasizing on real-estate and precast housing solutions. The company aims to launch affordable housing solutions namely Gammon House Reborn and Precast Housing Projects to meet the rising accommodation needs in the urban areas once the real-estate market gains momentum. The company is also constructing a warehouse for Ghandhara Tyre & Rubber Company Limited (GTYR) which will also serve as a long-term source of income.

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