DAAG FY2026: margin recovery restores a small profit
Verdict
Data Agro Limited (DAAG) returned to profit in the audited year ended June 30, 2026. Revenue grew 9.3% to Rs386.08 million, but the decisive change was in cost of sales: it declined slightly even as revenue rose, lifting gross profit by 65.3% and expanding gross margin by about eight percentage points. Lower administrative and finance costs carried that improvement through to a Rs7.50 million profit after tax, compared with a Rs24.69 million loss in FY2025.
The turnaround is meaningful, but not yet cash-backed. Operating activities used Rs32.81 million of cash, inventory and receivables both grew faster than sales, and short-term borrowings rose to Rs275.15 million. Finance cost still absorbed almost three-quarters of operating profit. DAAG therefore finished FY2026 profitable on the income statement while remaining dependent on working-capital financing.
Results at a glance
Reporting basis: audited standalone financial statements for the year ended June 30, 2026. Figures are in Pakistani rupees and rounded to millions unless stated otherwise.
Revenue: Rs386.08 million, up 9.3% from Rs353.21 million.
Gross profit: Rs91.46 million, up 65.3%; gross margin rose to 23.69% from 15.66%, an improvement of about 8.03 percentage points.
Profit from operations: Rs47.26 million versus Rs10.43 million.
Finance cost: Rs34.34 million, down 17.1% from Rs41.45 million.
Profit after tax: Rs7.50 million versus a Rs24.69 million loss; EPS was Rs1.88 versus negative Rs6.17.
Dividend: nil.
Operating cash flow: negative Rs32.81 million versus negative Rs14.82 million.
AlphaGen model scores
These are AlphaGen model outputs, not figures reported by Data Agro Limited:
Alpha QoQ Score: 97.49
TTM Performance Score: 98.47
3Y Business Perf Score: 59.00
Sector Leadership Score: 78.24
What improved
Gross margin was the core earnings driver
DAAG added Rs32.87 million of revenue while cost of sales fell by Rs3.26 million to Rs294.62 million. That combination increased gross profit by Rs36.13 million. Put differently, almost the entire operating turnaround came from retaining much more gross profit on each rupee of sales, not from rapid topline expansion.
The gross margin of 23.69% was close to the company’s FY2022–FY2024 range and well above FY2025’s depressed 15.66%. This makes FY2026 look more like a normalization from a weak base than a wholly new profitability level. It is still encouraging because revenue also exceeded the previous five-year high visible in the available financial history.
The current five-page PSX result does not break the full-year movement into seed volumes, selling prices, crop mix or procurement cost. The arithmetic transmission is clear—revenue rose while cost of sales fell—but the precise operational split is not disclosed. At the half year, management had said the agricultural industry was still absorbing the prior wheat-market disruption and that carried-over corn seed had been cleared without optimal pricing. That earlier commentary helps explain the weak first half, but it should not be treated as a complete explanation for the much stronger full-year margin.
Operating expenses were controlled
Distribution cost rose 6.5% to Rs14.88 million, slower than revenue. Administrative expenses fell 13.7% to Rs26.16 million. Other operating expenses increased to Rs3.16 million from Rs0.62 million, but total operating expenses still declined 1.6% to Rs44.20 million. Gross-profit growth therefore flowed through almost fully: operating profit increased by Rs36.83 million to Rs47.26 million.
The resulting operating margin was 12.24%, up from 2.95%. DAAG had reported a 14.4% operating margin in FY2024, so FY2026 recovered most, but not all, of the earlier operating profitability.
Finance cost provided a second lift
Finance cost fell by Rs7.11 million to Rs34.34 million. This moved in the right direction despite higher year-end short-term borrowings. The reduction is important because it converted the stronger operating result into positive pretax earnings. Profit before levy and income tax was Rs12.92 million, compared with a Rs28.93 million loss.
At the half year, management had identified financing expense and liquidity pressure as priorities and referred to restructuring and alternative financing. The full-year statements confirm a lower interest bill, but the summarized filing does not disclose whether that arose from pricing, facility mix, timing or some combination. It would be speculative to assign the reduction to one mechanism.
The earnings bridge is straightforward
Gross profit improved by Rs36.13 million, operating expenses fell by roughly Rs0.70 million, and finance cost declined by Rs7.11 million. Those gains more than offset the absence of FY2025’s Rs2.09 million other income and a larger income-tax charge. The Rs728,251 levy was also substantially below the prior year’s Rs4.42 million.
After the levy, profit before income tax was Rs12.19 million. Income tax of Rs4.69 million left profit after tax of Rs7.50 million. The 1.94% net margin shows that the company has returned to profit, but the buffer remains modest.
What weakened / needs attention
Accounting profit did not convert into cash
Cash generated from operations before finance cost, gratuity and tax was only Rs11.80 million, down from Rs31.63 million. After those payments, net operating cash flow was negative Rs32.81 million, more than twice the prior year’s outflow.
The main issue was working capital. Stock-in-trade increased by Rs52.69 million during the year and trade debts consumed another Rs29.92 million. A Rs19.15 million reduction in loans and advances and higher payables provided some offset, but the net working-capital outflow was Rs59.92 million. Stronger profit therefore did not translate into stronger liquidity.
Inventory at year-end was Rs259.40 million, up 25.5%, while trade debts reached Rs168.89 million, up 20.0%. Both grew much faster than revenue. Together with stores and spares, these balances accounted for roughly 96% of current assets excluding cash, making stock realization and customer collections central to the next year’s cash outcome.
Borrowing rose while cash declined
Short-term borrowings increased 13.6% to Rs275.15 million. The financing cash inflow of Rs32.92 million almost exactly funded the operating and investing cash outflows, leaving cash and bank balances at only Rs7.07 million, down 8.8%.
Current assets of Rs455.83 million covered current liabilities of Rs314.75 million by about 1.45 times, only slightly above 1.43 times a year earlier. That headline ratio is acceptable, but it is inventory-heavy. Excluding stock and stores, the quick ratio was approximately 0.59, down from about 0.64. Liquid resources therefore remain thin.
Finance cost of Rs34.34 million consumed about 72.7% of the Rs47.26 million operating profit. Even though the interest bill improved, DAAG has limited room for a margin setback or another working-capital shock.
The year-end recovery appears concentrated
Available quarterly history shows a volatile pattern across FY2026, including loss-making quarters before the final-year turnaround. The audited annual result is authoritative; however, the public five-page filing does not provide a management bridge explaining how much of the recovery came from product mix, seasonality, write-backs or year-end sales. The next interim report should be tested for persistence rather than assuming FY2026’s closing performance is a steady run rate.
No dividend was declared
Retaining earnings is understandable given negative operating cash flow, higher short-term debt and working-capital needs. It also means the return to profit did not produce a cash distribution to shareholders.
Balance-sheet context
Total assets increased 7.7% to Rs651.12 million, led by current assets. Property, plant and equipment fell to Rs194.59 million from Rs210.75 million, while capital expenditure was only Rs0.79 million. Equity increased 2.0% to Rs285.82 million, reflecting the year’s profit partly offset by a Rs1.90 million after-tax actuarial loss and the transfer of incremental depreciation from the revaluation surplus.
Total comprehensive income was Rs5.61 million, lower than net profit because of that actuarial loss. This contrasts with FY2025, when an Rs82.30 million net revaluation surplus lifted comprehensive income despite the statutory loss. The FY2026 equity movement was therefore smaller but more closely linked to actual earnings.
Historical perspective
DAAG’s earnings have been uneven. In the available series, net profit was Rs2.68 million in FY2022, Rs16.82 million in FY2023, Rs7.49 million in FY2024, followed by the Rs24.69 million FY2025 loss and the Rs7.50 million FY2026 recovery. Revenue and margins have also moved sharply with agricultural cycles, inventory positions and financing conditions.
FY2026 restored gross margin toward prior-cycle levels, but leverage and cash conversion are less comfortable than earlier in the period. Short-term debt has risen from about Rs26 million in FY2022 to Rs275 million, while inventory turnover and quick liquidity have weakened. That structural shift makes working-capital discipline as important as reported gross margin.
What to monitor next
Gross-margin persistence: whether margin stays near 24% after the unusually weak FY2025 comparison drops out.
Inventory: whether the Rs259.40 million stock balance converts into sales without discounting or impairment.
Receivables: whether trade debts fall relative to revenue and operating cash flow turns positive.
Finance burden: whether lower finance cost can continue while short-term borrowing is higher.
Product mix: whether corn, wheat, paddy, cotton and silage disclosures identify the sources of margin improvement.
Dividend capacity: whether positive earnings and cash generation become strong enough to support a future distribution.
Evidence limitation
The exact FY2026 identity, reporting period, earnings, balance sheet and cash flow are supported by the official PSX result filing. The 29.8 MB annual-report PDF exceeded the publisher’s mandated 25 MB retrieval ceiling, while the issuer’s archive had not yet exposed a 2026 link. Accordingly, this analysis does not make claims about the FY2026 audit opinion, detailed note disclosures, customer concentration, product volumes or management’s full-year causal narrative. The half-year management discussion is used only as dated context.
Overall assessment
DAAG delivered a genuine earnings recovery in FY2026. Gross margin normalized, operating expenses remained controlled and finance cost declined, reversing the prior year’s loss. The result is nevertheless fragile: net margin was below 2%, operating cash flow remained negative, working capital expanded and short-term borrowing increased. The strongest confirmation in the next report would be positive operating cash flow accompanied by lower inventory and receivables—not merely another accounting profit.
Sources
Primary result: Data Agro Limited FY2026 financial statements filed with the Pakistan Stock Exchange.
Annual-report filing: Data Agro Limited Annual Report 2026 on PSX.
Company record: Pakistan Stock Exchange — DAAG.
Earlier management context: DAAG half-year report for the period ended December 31, 2025.
Issuer archive: Data Agro Limited investor information.
All percentage changes, margins and coverage ratios in this article are calculated from the cited reported figures. AlphaGen scores are model outputs and are not company-reported measures.