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Ghani Global Holdings Q3 FY26: Hattar Efficiency Lifts Gross Profit, but Finance Costs Absorb the Gain

Ghani Global Holdings grew Q3 sales and gross profit, led by its gases business, but higher finance costs and overheads kept pretax earnings under pressure.

Sep 22, 2026

Verdict

Ghani Global Holdings Limited delivered a stronger Q3 FY26 top line and gross profit, but the quarter was less powerful beneath the surface than the headline profit growth suggests. Consolidated net sales rose 16.8% year on year to Rs2.850 billion and gross profit rose 16.7% to Rs1.393 billion. Yet operating profit increased only 4.9% because distribution, administrative and other operating costs rose sharply, while finance cost jumped 53.7% to Rs208.5 million. Profit before taxation was therefore broadly flat, even as profit after tax increased 18.3% to Rs669.2 million.

The nine-month picture is even clearer. Net sales rose 8.6% and gross profit 22.7%, with gross margin improving by more than five percentage points, largely supported by better economics at Ghani Chemical Industries’ newer Hattar plant. But group operating profit rose only 4.9% and profit before taxation and minimum tax levies was essentially unchanged. The 32.9% increase in reported nine-month PAT came mainly from a much lower tax and levy burden rather than a similar increase in pretax earnings. That makes the quality of the result mixed: manufacturing economics improved materially in the core gases business, but working-capital absorption, higher financing costs and weakness at the glass subsidiary remain important constraints.

Results at a glance

  • Company: Ghani Global Holdings Limited. Ticker: GGL. Reporting period: quarter and nine months ended March 31, 2026. The consolidated condensed interim financial statements are unaudited; the June 30, 2025 statement-of-financial-position comparative is audited and restated where disclosed.
  • Q3 FY26 consolidated net sales were Rs2.850 billion versus Rs2.439 billion, up 16.8%. Gross profit was Rs1.393 billion versus Rs1.193 billion, up 16.7%. Gross margin was almost unchanged at 48.9%.
  • Q3 operating profit increased 4.9% to Rs1.053 billion, but operating margin fell to 36.9% from 41.1%. Finance cost rose 53.7% to Rs208.5 million. Profit after tax rose 18.3% to Rs669.2 million, while profit attributable to equity holders of the holding company increased 24.4% to Rs374.4 million.
  • 9MFY26 net sales rose 8.6% to Rs8.075 billion and gross profit rose 22.7% to Rs3.748 billion. Gross margin improved to 46.4% from 41.1%, but operating margin slipped to 34.9% from 36.2% as distribution and administrative costs accelerated.
  • 9MFY26 profit before taxation and minimum tax levies was Rs2.242 billion, almost flat year on year, while PAT rose 32.9% to Rs1.911 billion because taxation and minimum-tax levies fell to Rs330.6 million from Rs811.1 million.
  • AlphaGen model outputs — not company-reported figures: Alpha QoQ Score: 35.68; TTM Performance Score: 85.88; 3Y Business Perf Score: 99.57; Sector Leadership Score: 74.59.
  • The board recommended no cash dividend, bonus shares, rights issue or other entitlement/corporate action with the Q3 result.

What actually drove the improvement

The strongest operating contributor was Ghani Chemical Industries Limited, the group’s industrial and medical gases and chemicals subsidiary. For the nine months, GCIL’s net sales increased 12.2% to Rs5.987 billion and gross profit rose 30.0% to Rs3.252 billion. Management attributes the higher profitability primarily to lower production cost from better efficiency at the newer Hattar plant. That explanation is economically consistent with the group-level improvement in gross margin: consolidated cost of sales actually declined slightly even as consolidated net sales increased.

GCIL’s nine-month operating profit increased 15.8% to Rs2.641 billion and PAT rose 58.4% to Rs1.927 billion. Management also cites tax incentives available at the Hattar Special Economic Zone. Pakistan’s SEZ framework provides qualifying zone enterprises with fiscal incentives, including income-tax exemptions for prescribed periods and one-time customs-duty and tax exemptions for eligible capital goods. The operating efficiency gain is therefore a recurring business improvement if the plant sustains its utilization and cost advantage, while the tax benefit is better viewed as a time-bound structural support rather than permanent operating profit.

This distinction matters because the consolidated group’s nine-month pretax result barely changed. Gross profit increased by Rs692.8 million, but distribution cost more than doubled to Rs452.8 million, administrative expense rose 70.6% to Rs372.6 million, other income fell 67.7% to Rs68.7 million, and finance cost increased 28.8% to Rs564.7 million. In other words, much of the manufacturing gain was absorbed before it reached pretax profit.

Q3: revenue growth was real, but operating leverage moved the wrong way

Quarterly net sales increased by Rs410.9 million and gross profit by Rs199.4 million. Gross margin stayed almost exactly flat at about 48.9%, so Q3 did not depend on a sudden margin spike. The problem was the cost structure below gross profit. Distribution expense increased 28.6%, administrative expense more than quadrupled to Rs141.1 million, and other expenses rose modestly. Operating profit therefore grew only 4.9%, far behind revenue and gross profit.

Finance cost was the second major drag. Q3 finance expense rose to Rs208.5 million from Rs135.7 million, an increase of 53.7%. Profit before taxation and minimum tax levies fell 4.3% to Rs830.6 million. Reported profit before taxation was roughly flat because the minimum-tax-levy line was favorable in the quarter, and the subsequent tax charge was materially lower than a year earlier. That is why PAT increased despite weak pretax progression.

For shareholders of the holding company, Q3 attributable profit rose 24.4% to Rs374.4 million and combined EPS increased to Rs1.06 from Rs0.85. The gap between total group PAT and profit attributable to GGL shareholders is important because the subsidiaries have meaningful non-controlling interests; Rs294.7 million of Q3 PAT was attributable to those non-controlling shareholders.

Ghani Global Glass Limited moved in the opposite direction from the gases business. Nine-month net sales fell 4.2% to Rs2.036 billion, gross profit fell 11.4% to Rs490.4 million and PAT dropped 71.0% to Rs70.7 million. Management links the weakness to lower volumes following closure of the Afghanistan border, flooding earlier in the financial year, higher raw-material prices and consumption, lower other income, and start-up costs from a glass furnace commissioned in July 2025.

The weakness is especially visible in exports: GGGL’s nine-month gross export sales fell to Rs52.5 million from Rs134.1 million. At the same time, the furnace start-up burden meant the subsidiary did not fully benefit from its enlarged manufacturing base. This makes the group’s consolidated improvement more concentrated than the top-line number suggests: GCIL was doing most of the heavy lifting while glass diluted the benefit.

Broader manufacturing conditions were not uniformly weak. Pakistan Bureau of Statistics reported overall large-scale manufacturing growth of 6.48% in July–March FY26, while the Pakistan Economic Survey recorded a 1.4% contraction in chemicals and a 5.1% contraction in pharmaceuticals over the same period. That mixed backdrop supports a cautious interpretation: GGL’s gas subsidiary improvement appears meaningfully company-specific because management ties it to plant efficiency, while the glass subsidiary faced both company-specific start-up costs and difficult end-market conditions.

Cash generation improved, but working capital expanded sharply

Net operating cash flow increased 22.5% to Rs1.130 billion from Rs922.2 million. That is positive, but the underlying working-capital movement is demanding. Before working-capital changes, operating cash generation was Rs3.238 billion. Working capital then absorbed Rs1.960 billion, more than the Rs1.610 billion absorbed in the comparable period.

The largest uses were trade receivables, which absorbed Rs1.316 billion, loans and advances, which absorbed Rs721.1 million, and stock in trade, which absorbed Rs483.2 million. Trade and other payables increased by Rs756.4 million and partly financed that expansion. The balance sheet shows the same pattern: trade receivables increased 44.5% from June to Rs4.218 billion, stock in trade rose 34.5% to Rs1.886 billion, and loans and advances more than doubled to Rs1.216 billion.

This is the main cash-conversion question for the next result cycle. Revenue is growing, but a large share of that growth is tied up in receivables, inventory and advances. If those balances normalize as sales are collected and projects mature, cash conversion can improve quickly. If they continue to expand faster than revenue, the group may need more short-term funding even if accounting profit remains healthy.

Capex and funding: the group is still investing aggressively

Fixed capital expenditure increased 41.6% to Rs1.975 billion and net investing cash outflow reached Rs2.001 billion. Property, plant and equipment rose to Rs16.719 billion from Rs15.219 billion at June 2025. The notes show Rs4.529 billion of gross fixed-asset additions during the period, dominated by plant and machinery, while more than Rs4.058 billion of capital work in progress was capitalized. This is consistent with a group moving from construction and commissioning toward operating its expanded asset base.

Funding pressure has risen alongside that investment. Short-term borrowings increased 19.8% from June to Rs4.396 billion and the current portion of non-current liabilities increased 48.4% to Rs1.172 billion. Cash and bank balances fell 29.8% to Rs660.6 million. The group still generated operating cash, but capital expenditure and working-capital needs required Rs590.1 million of net financing inflow during the nine months.

The interest-rate environment became less helpful immediately after the quarter. The State Bank of Pakistan raised its policy rate from 10.5% to 11.5% effective April 28, 2026. Because finance cost was already rising faster than operating profit in Q3, the next results should show whether volume growth and plant efficiency are enough to absorb a higher benchmark-rate environment.

New projects: potentially meaningful, but not yet current-period earnings

The group also has a material growth project outside the current quarter’s earnings. GCIL and Mari Energies have formed GHG Emissions Mitigation Limited to recover hydrocarbons from exhaust gas at Mari field’s Sachal Gas Processing Complex and produce LNG plus industrial and food-grade carbon dioxide. Mari Energies announced on April 2, 2026 that HBL had been mandated to arrange project financing. GGL’s quarterly report says GCIL had invested Rs98 million for its 49% equity share by January 2026 and was seeking shareholder approval for further equity investment.

That project should be treated as a future capital-allocation item, not as part of Q3 operating performance. Its economics will depend on final financing, construction execution, commissioning and offtake. The same caution applies to the newly incorporated G3 REIT Management Limited and other diversification initiatives: they may broaden the group over time, but the present earnings engine is still overwhelmingly the operating subsidiaries, particularly industrial and medical gases.

What improved

  • Q3 net sales and gross profit both grew about 17%, showing continued demand and stable quarterly gross margin.
  • 9MFY26 consolidated gross margin improved to 46.4% from 41.1%, with management pointing to better efficiency at GCIL’s Hattar plant.
  • GCIL’s nine-month sales, gross profit, operating profit and PAT all increased materially.
  • Net operating cash flow increased to Rs1.130 billion from Rs922.2 million despite a larger working-capital build.
  • Profit attributable to GGL’s equity holders increased 37.1% over nine months to Rs1.072 billion.

What weakened / needs attention

  • Nine-month pretax earnings were essentially flat despite the large gross-profit increase because operating expenses and finance costs rose sharply.
  • Q3 finance cost rose 53.7%, while short-term borrowings and the current portion of non-current liabilities increased from June.
  • GGGL remained a drag, with nine-month PAT down 71.0% and exports materially lower.
  • Trade receivables, inventory and loans/advances expanded substantially, tying up cash as the group scaled operations.
  • A large part of nine-month PAT growth came from a much lower tax and levy burden, so the headline earnings growth rate overstates the improvement in pretax operating economics.

Recurring versus non-recurring earnings drivers

The most important recurring drivers are GCIL’s gas and chemical volumes, Hattar plant efficiency, the profitability and utilization of GGGL’s furnace and value-added glass capacity, raw-material and energy costs, operating overhead, working-capital discipline and finance cost. Those are the variables that should determine whether the current gross-profit improvement translates into sustainable pretax growth.

The lower nine-month tax and levy burden materially boosted reported PAT and should not be extrapolated mechanically. Hattar SEZ incentives may continue according to their legal terms, but they are time-bound fiscal benefits rather than operating margin. Other income is also variable: it fell to Rs68.7 million from Rs212.6 million, meaning current-period earnings were actually less dependent on that line than the comparable period.

The holding company’s standalone numbers are not a good proxy for the group. Standalone nine-month PAT fell to Rs15.4 million from Rs144.9 million largely because the prior-year period included dividend income from an associated company. Consolidated analysis removes intragroup income effects and is therefore the better basis for assessing GGL’s underlying economics.

What to monitor next

  • Whether GCIL can sustain the Hattar plant’s efficiency gains and protect gross margin as utilization evolves.
  • Whether GGGL’s furnace stabilizes, export channels recover and the subsidiary stops diluting consolidated profitability.
  • Trade-receivable and inventory conversion, especially whether working capital grows more slowly than revenue.
  • Finance cost after the post-period increase in the SBP policy rate and the direction of short-term borrowings.
  • The normalized tax rate after the unusually large year-on-year reduction in tax and minimum-tax levies.
  • Capital allocation into the Mari-field emissions-mitigation project and other diversification initiatives, including the funding mix and timing before they contribute cash earnings.

Bottom line

Ghani Global Holdings’ Q3 FY26 result is fundamentally a story of stronger manufacturing economics in gases meeting a heavier cost of scale. The core gases subsidiary benefited from a more efficient Hattar plant, lifting group gross profit and nine-month gross margin. But the benefit was diluted by much higher distribution and administrative expenses, rising finance costs, a weak glass subsidiary and a significant working-capital build.

The next result should therefore be judged on pretax conversion rather than headline PAT alone. If Hattar efficiency persists, glass stabilizes and receivables begin converting to cash, the current asset base can support better earnings quality. If finance costs and working capital continue rising faster than operating profit, the group may keep reporting healthy gross profit without seeing the same strength reach free cash flow and shareholder earnings.

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