Pak Elektron Limited

Pak Elektron Limited (PSX: PAEL) was incorporated in Pakistan as a public limited company in 1956. The company is engaged in the manufacturing and sale of domestic appliances and electrical capital goods. The company organizes itself in two divisions – power and appliances. The company was acquired by Saigol Group of Companies in 1978. The company has formed several alliances over the years with renowned international companies including Hitachi, Fujitsu and General Electric. Pattern of Shareholding As of June 30, 2025, PAEL has a total of 923. 649 million shares outstanding which are held by 19, 635 shareholders. General public has the majority stake of 36. 91 percent in the company followed by its directors, CEO, their spouse and minor children holding 27. 87 percent shares. Joint stock companies account for 11. 38 percent of PAEL’s shares while foreign companies hold 7. 86 percent shares. Around 7. 75 percent of the company’s shares are held by Banks, DFIs and NBFIs, 4. 84 percent by Modarabas & Mutual Funds and 1. 10 percent by insurance companies. The remaining ownership is distributed among other categories of shareholders. Financial Performance (2021-25) Barring 2023, PAEL’s topline rode an upward trajectory over the period under consideration. Conversely, its bottomline took a plunge in 2022. PAEL’s margins portrayed an erratic pattern over the period under consideration. Gross and operating margins attained their optimum level in 2023 while net margin maxed in 2025. The detailed performance review of the period under consideration is given below. The promising recovery post-COVID is evident in 48. 92 percent year-on-year increase in PAEL’s net sales which clocked in at Rs. 42, 887. 36 million in 2021. With robust economic recovery, industrial sector revival and rapid urbanization, PAEL’s power division posted 62 percent year-on-year growth in its revenues. Home appliances division’s revenues also magnified by 37. 39 percent in 2021 on the heels of tremendous rise in disposable income principally, agricultural income and foreign remittances. Cost of sales mounted by 51 percent year-on-year in 2021 which was the consequence of hiking inflation, supply chain disruptions, high global commodity prices, gas shortages and electricity tariff hike. While gross profit progressed by 41. 65 percent year-on-year in 2021, GP margin ticked down to 21. 14 percent from 22. 23 percent in 2020. Distribution expense surged by 18. 46 percent year-on-year in 2021 on account of increased freight & forwarding charges, advertising & sales promotion as well as salaries & benefits. Administrative expense also grew by 18. 41 percent year-on-year in 2021, primarily on the back of higher payroll expense, as the number of employees grew by 2. 9 percent year-on-year to clock in at 5745 in 2021. High profit related provisioning undertaken during the year resulted in 301. 53 percent spike in other expense. Operating profit registered 71. 37 percent year-on-year enhancement in 2021 with OP margin rising up to 10. 22 percent from 8. 88 percent in 2020. Finance cost slid by 1. 12 percent in 2021 due to discount rate cuts and reduced borrowings, which is also evident in a slump in its gearing ratio from 20. 20 percent in 2020 to 18. 80 percent in 2021. Net profit enlarged by 610. 78 percent in 2021 to clock in at Rs. 1591. 076 million. This translated into EPS of Rs. 2. 89 and NP margin of 3. 71 percent in 2021 versus EPS of Rs. 0. 36 and NP margin of 0. 78 percent registered in the previous year. PAEL’s topline grew by 22. 15 percent year-on-year to clock in at Rs. 52, 386. 18 million in 2022. This was on the heels of 52. 24 percent rise in power division revenues. Home appliances division posted a marginal decline of 0. 74 percent in 2022 which signifies product cost hike and sluggish economic backdrop which squeezed the purchasing power of consumers. Cost of sales spiraled by 24. 44 percent year-on-year in 2022 on account of high inflation, global commodity super cycle, Pak Rupee depreciation and hike in energy tariff. Gross profit inched up by 13. 61 percent year-on-year in 2022, however, GP margin slipped down to 19. 66 percent. 7. 28 percent year-on-year growth in distribution expense in 2022 was the result of elevated freight & forwarding charges on account of high petroleum prices. While the workforce shrank by 14 percent to clock in at 4921 employees, payroll expense continued to mount in line with inflation. This resulted in 15. 37 percent year-on-year spike in administrative expense in 2022. During the year, PAEL’s export sales immensely boosted, yielding significant foreign exchange gain. This pushed up the company’s other income by 102. 75 percent in 2022. As against previous three years, PAEL booked reversal of impairment booked on ECL worth Rs. 241. 88 million in 2022. As a consequence, operating profit built up by 24. 14 percent year-on-year in 2022 with OP margin climbing up to 10. 38 percent. Finance cost soared by 42. 15 percent year-on-year in 2022 due to excessive monetary tightening as well as enormous rise in working capital related borrowings. The company also issued 358. 33 million ordinary shares during the year which compressed its gearing ratio to 15. 82 percent in 2022. Higher finance cost coupled with the imposition of additional taxes during the year constricted PAEL’s bottomline by 32. 91 percent year-on-year in 2022. Net profit stood at Rs. 1067. 47 million in 2022 with EPS of Rs. 1. 33 and NP margin of 2. 04 percent. PAEL net sales dwindled by 26. 15 percent year-on-year to clock in at Rs. 53, 112. 91 million in 2023. Drastic drop in the purchasing power of consumers due to hike in inflation took its toll on the performance of home appliances division whose revenues fell by 34. 82 percent in 2023. Furthermore, sluggish industrial activity also kept the power division sales under stress resulting in 18. 2 percent decline in its revenues. Geographical breakup of sales shows decline in both local and export sales during the year. On supply front, import restrictions also contributed to lower production and sales during the year. Cost of sales plunged by 34. 46 percent year-on-year in 2023, translating into 7. 79 percent uptick in gross profit. Due to limited supply in the market, the company was able to pass on the onus of high raw material cost and Pak Rupee depreciation to its consumers. This resulted in an extraordinary GP margin of 28. 70 percent in 2023. Due to lower sales volume, distribution expense shrank by 38. 20 percent in 2023. PAEL also undertook lesser advertising & promotion drives during the year. Salaries expense also dwindled during the year. Conversely, administrative expense increased by 4. 23 percent in 2023. This was on account of higher Ujrah payments, utility charges as well as repair & maintenance charges. Conversely, payroll expense fell during the year as the company streamlined its workforce to 4238 employees in 2023. PAEL was able to improve its operating profit by 27. 83 percent in 2023 with OP margin jumping up to 17. 97 percent. Finance cost mounted by 18. 1 percent year-on-year in 2023 on account of unprecedented level of discount rate. This was despite the fact that the company significantly reduced its borrowings during the period through efficient working capital management. Lesser debts and higher retained earnings resulted in a significant decline in gearing ratio in 2023. Net profit strengthened by 24. 13 percent to clock in at Rs. 1325. 089 million in 2023 with EPS of Rs. 1. 5 and NP margin of 3. 43 percent. In 2024, PAEL posted year-on-year growth of 37. 30 percent in its topline which clocked in at Rs. 53, 112. 91 million. This was mainly on account of price adjustments undertaken during the year. Power division recorded 13. 48 percent increase in its revenues in 2024 which was the result of political stability, rising urbanization, industrial growth and housing sector expansion. Appliances division posted a phenomenal 79. 71 percent growth in 2024 due to increase in consumer demand as the macroeconomic indicators posted resilience. Stability in the company’s raw material imports and expansion in supply chain operations also buttressed the sale of home appliances in 2024. Refrigerator continued to be the star product of PAEL accounting for 28. 98 percent of its total revenues. Refrigerator sales mounted by 50. 32 percent in 2024 as the company launched 25 new market competitive models. Cost of sales surged by 41. 29 percent in 2024 due to prolonged period of high inflation, hike in energy tariff, global commodity price fluctuations and Pak Rupee depreciation. This resulted in 27. 37 percent stronger gross profit in 2024. However, GP margin ticked down to 26. 63 percent in 2024. Distribution expense surged by 68. 86 percent in 2024 due to heightened advertising & sales promotion budget, freight & forwarding charges, salaries of sales force and warranty period services. Administrative expense surged by 24. 92 percent in 2024 on the back of increased payroll expense which was the impact of inflationary pressure and workforce expansion to 4788 employees. Other income dipped by 25. 34 percent in 2024 due to considerable decline in foreign exchange gain. Other expense also plummeted by 64. 70 percent in 2024, however, it counterbalanced PAEL’s other income. Allowance for ECL booked during the year escalated by 258 percent in 2024. PAEL recorded 16. 85 percent higher operating profit in 2024; however, its OP margin nosedived to 15. 29 percent. Finance cost inched up by only 0. 86 percent in 2024 due to the onset of monetary easing during the year. PAEL’s external borrowings picked up during the year resulting in a gearing ratio of 11. 30 percent in 2024 versus gearing ratio of 8. 1 percent recorded in 2023. PAEL posted 78. 64 percent improvement in its net profit which clocked in at Rs. 2367. 074 million in 2024. This translated into EPS of Rs. 2. 72 and NP margin of 4. 46 percent in 2024. PAEL’s net sales mounted by 19. 60 percent to clock in at Rs. 63, 523. 51 million in 2025. Both local and export sales rebounded during the year. This was the result of the company’s continuous investment in R&D which enabled it to launch energy efficient appliances model. Appliances division proved to be the star performer in 2025 witnessing 34. 37 percent growth in revenue. The sales of power division remained stable during the year with a marginal 0. 50 percent growth. Economic and political stability, growing urbanization, enhanced consumer purchasing power and investment in transmission & distribution infrastructure were the main exogenous factors which supported the company’s sales in 2025. Export of transformers to the US region also buttressed PAEL’s sales performance during the year. Strategic price adjustments made during the year also strengthened the company’s performance in 2025. Cost of sales surged by 19. 03 percent in 2025. The company recorded 21. 19 percent higher gross profit in 2025 with GP margin clocking in at 27 percent. Distribution expense grew by 42. 59 percent in 2025 due to increased freight & forwarding charges incurred during the year. Administrative expense surged by 16. 27 percent in 2025 due to market induced rise in salaries. The company also expanded its workforce from 4788 employees in 2024 to 5342 employees in 2025. 54. 87 percent stronger other income recognized during the year was the result of massive exchange gain, reversal of impairment of long-term investments and gain on the disposal of fixed assets. Other income was offset by 35. 38 percent taller other expense incurred in 2025 which was the consequence of increased profit related provisioning done during the year. PAEL also booked 105. 11 percent higher allowance for ECL to the tune of Rs. 622. 55 million in 2025. Operating profit strengthened by 10. 63 percent in 2025, however, OP margin slipped to 13. 60 percent. Finance cost shrank by 29. 95 percent in 2025 due to monetary easing and reduced borrowings. Gearing ratio fell to 9. 40 percent in 2025; PAEL registered 62. 51 percent year-on-year improvement in its bottomline which clocked in at Rs. 3846. 675 million in 2025. This translated into EPS of Rs. 4. 24 and NP margin of 6 percent in 2025. Recent Performance (1HCY26) During the first half of CY26, PAEL recorded 19. 14 percent year-on-year growth in its topline which clocked in at Rs. 42, 321. 34 million. This was the result of a rebound in both local and export sales during the period. The export of transformers to the US market greatly supported the topline growth. Enhancement of its energy efficient portfolio and adoption of a multi-brand approach in the home appliances segment also played a pivotal role in augmentation of the company’s market reach. Cost of sales mounted by 22. 88 percent due to consistent cost pressures. PAEL recorded 9 percent growth in its gross profit in 1HCY26, however, GP margin dipped to 24. 75 percent versus 27 percent in 1HCY25. Robust sales volume and elevated fuel prices in the consequence of Middle Eastern crisis resulted in 33. 17 percent spike in distribution expense in 1HCY26. Administrative expense also surged by 20. 35 percent in 1HCY26 due to higher payroll expense. Gain on the disposal of fixed assets, profit on bank deposits and exchange gain appear to be the cause of 12. 69 percent stronger other income recognized during the period. Other income was offset by 2932. 21 percent taller other expense incurred in 1HCY26 which is likely due to increased profit related provisioning done. Operating profit deteriorated by 7. 89 percent in 1HCY26 with OP margin ticking down from 16. 43 percent in 1HCY25 to 12. 70 percent in 1HCY26. Lesser outstanding liabilities pushed down finance cost by 7. 39 percent in 1HCY26. Net profit ticked up by 10. 51 percent to clock in at Rs. 2618. 907 million in 1HCY26. This translated into EPS of Rs. 2. 84 and NP margin of 6. 19 percent in 1HCY26 versus EPS of Rs. 2. 66 and NP margin of 6. 67 percent recorded in 1HCY26. Future Outlook Recovery in macroeconomic fundamentals including ease in import restrictions, improvement in exchange rate as well as downtick in inflation and discount rate etc has greatly buttressed consumer and investor confidence in the recent times. Increase in urbanization, evolution of nuclear family setup and the need of energy efficient appliances will also aid the sale of appliance division. In power division, the company is also executing tamper-proof metering system for well-ordered billing. This would in-turn resolve the issue of pilferage, infrastructure losses and bills recovery. The company is also working on its strategic partnerships. Recently, it has expanded its partnership with Panasonic to launch premium smart LED solutions in Pakistan. PAEL has also entered into strategic partnership with Electrolux AB, a global leader in home appliances The company’s growing focus on export sales will also buttress its financial performance in future.

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