International Packaging Films FY2026: Margins Drive Earnings

Verdict: International Packaging Films Limited ended FY2026 with a step-change in group profitability rather than a simple revenue rebound. Audited consolidated revenue rose 22.7% to Rs42.17 billion, but gross profit rose 88.0% to Rs9.39 billion and operating profit more than doubled to Rs8.14 billion as gross margin expanded to 22.3% from 14.5%. Profit after tax reached Rs4.95 billion versus Rs664 million. The improvement was broad enough to remain compelling after separating a Rs355.7 million Sindh Infrastructure Development Cess remeasurement gain: adjusted operating profit still more than doubled. Cash conversion also improved, with operating cash flow turning positive and short-term borrowings declining. The key question for the next cycle is whether the unusually strong June-quarter margin can persist while inventory and receivables remain elevated.

Results at a glance

Company Name: International Packaging Films Limited
Ticker: IPAK
Reporting period: year ended June 30, 2026. The official PSX result states that the attached annual sections are from audited financial statements. This article uses the consolidated accounts as the primary group view. The separate annual report and auditor-opinion document had not yet been transmitted with the result announcement, so no additional audit-opinion wording is inferred. The nine-month March 2026 accounts used for the Q4 bridge are explicitly unaudited.
FY2026 consolidated revenue was Rs42.17 billion, up 22.7% from Rs34.37 billion. Gross profit increased 88.0% to Rs9.39 billion and operating profit rose 112.9% to Rs8.14 billion.
Gross margin expanded to 22.3% from 14.5%, while operating margin increased to 19.3% from 11.1%. Consolidated profit after tax rose to Rs4.95 billion from Rs664 million; profit attributable to owners increased to Rs4.95 billion from Rs1.20 billion, and EPS rose to Rs6.73 from Rs1.64.
Because the company did not publish a separate audited fourth-quarter income statement, Q4 figures in this article are derived as audited FY2026 less the official unaudited nine-month figures ended March 31, 2026. On that basis, derived Q4 revenue was about Rs11.74 billion, up 41.3% year on year; gross margin was about 30.8% versus 16.5%; and total group profit after tax was about Rs2.59 billion versus a loss of roughly Rs84 million in the comparable derived quarter.
Exports rose around 30% to Rs10.4 billion and represented nearly 25% of consolidated sales, up from about 23% in FY2025. The board recommended a final cash dividend of Rs2.00 per share, compared with Rs0.60 per share for FY2025.
Net cash generated from operating activities improved to Rs2.20 billion from an outflow of Rs1.61 billion. Short-term borrowings fell 12.1% to Rs8.25 billion, even as inventory and trade receivables increased.

AlphaGen model outputs

The following are AlphaGen model outputs, not company-reported figures:

Alpha QoQ Score: 100
TTM Performance Score: 100
3Y Business Perf Score: 89.61
Sector Leadership Score: 50.49

What improved

The strongest part of FY2026 was the expansion in gross profit. Revenue added about Rs7.80 billion year on year, while gross profit added about Rs4.39 billion. That pushed gross margin up by roughly 7.7 percentage points. This is economically important because it shows the earnings improvement was not driven only by greater throughput: the group retained much more gross profit from each rupee of sales.

The public evidence gives several operating explanations. In the nine-month review, management attributed performance to improved capacity utilization across subsidiaries, sustained cost discipline and stronger operating dynamics. It said Cast Packaging Films benefited from favorable raw-material procurement dynamics and improved pricing conditions, Global Packaging Films delivered strong sales growth and higher gross profitability as utilization and market reach improved, and PETPAK continued to strengthen operationally. These are company-reported explanations and are more informative than attributing the margin change to an unspecified commodity move.

The full-year company update adds an important mix dimension. IPAK said the group continued shifting toward specialized and value-added packaging films while expanding international markets. Exports reached about Rs10.4 billion, nearly one-quarter of consolidated sales. At the parent-company level, revenue actually fell 14.2% to Rs13.35 billion, yet gross profit rose 14.5% and profit after tax rose 54.8% to Rs1.32 billion. Management attributed the standalone improvement to allocating production capacity toward relatively higher-margin domestic business and a stronger product mix. That contrast — lower parent revenue but better parent profit, alongside strong subsidiary-led group growth — supports the view that mix and group capacity utilization were central to FY2026.

A peer check suggests that some of the operating backdrop was broader than IPAK alone. Tri-Pack Films, another producer of BOPP/CPP films, reported June-quarter revenue growth of about 30%, gross profit growth of roughly 87% and a swing to profit from a prior-year loss. That does not prove the same drivers applied to both companies, but it indicates that flexible-film industry conditions were capable of supporting better volumes and margins. IPAK’s own margin expansion was materially larger, so the result still appears to contain a meaningful company-specific component from mix, utilization and subsidiary execution.

Finance costs moved in the right direction as well. Consolidated finance cost fell 16.0% to Rs1.86 billion even though the business was larger. The nine-month directors’ review linked lower finance costs to working-capital management and stronger internal cash generation. Benchmark rates also changed during the year; by April 28, 2026 the State Bank of Pakistan had raised its policy rate to 11.5%. The company’s lower year-end short-term borrowing balance therefore remains relevant to what finance costs do next.

The balance sheet also became more liquid on a headline basis. Current assets rose to Rs20.17 billion from Rs16.17 billion while current liabilities fell to Rs17.31 billion from Rs19.18 billion, moving the current ratio to about 1.17 from 0.84. Short-term borrowings declined to Rs8.25 billion from Rs9.38 billion and long-term financing was broadly flat at Rs4.11 billion. Total equity increased to Rs21.12 billion from Rs16.47 billion.

What weakened / needs attention

The biggest area to watch is working-capital intensity. Stock-in-trade increased 41.4% to Rs7.26 billion and trade receivables rose 23.2% to Rs9.56 billion. Together, those two balances increased by almost Rs4 billion. The group still generated positive operating cash flow because cash generated from operations rose sharply to Rs5.22 billion, but the larger inventory and receivable base means more capital is tied up in supporting growth.

Trade and other payables fell to Rs7.32 billion from Rs8.22 billion, which is constructive from a supplier-obligation perspective but also means the company received less working-capital financing from suppliers at year-end. Future cash conversion will therefore depend on whether inventories turn and receivables collect without requiring another increase in bank funding.

The reported operating-profit jump also includes a clearly identifiable exceptional item. FY2026 contained a Rs355.7 million net gain on remeasurement of Sindh Infrastructure Development Cess, with no comparable gain in FY2025. The nine-month statement did not contain this line, so it was recognized in the June-quarter bridge. It should not be treated as a recurring operating driver. Importantly, removing the gain still leaves FY2026 operating profit at about Rs7.79 billion, more than double FY2025. On the same adjusted basis, derived Q4 operating profit would still be about Rs3.14 billion versus roughly Rs1.06 billion a year earlier.

Deferred tax also needs separate treatment. The official FY2026 result states that a net deferred-tax charge of Rs452 million reduced reported consolidated profit after tax to Rs4.95 billion and describes the charge as non-cash. Excluding that impact, the company said consolidated profit after tax would have been approximately Rs5.40 billion. This does not mean the tax expense should be ignored, but it does mean cash earnings were stronger than the reported PAT line alone suggests.

Another reason the headline PAT growth rate looks unusually large is the change in non-controlling interests. In FY2025, losses attributable to non-controlling interests were Rs538 million, whereas FY2026 recorded a small positive NCI contribution. Profit attributable to owners of the holding company still rose more than fourfold to Rs4.95 billion from Rs1.20 billion, so the earnings recovery remains substantial even after avoiding the optical effect created by the prior-year NCI loss.

The Q4 bridge: exceptional margins, but separate the one-off

The derived June quarter was the strongest period of the year. Audited full-year figures less the official nine-month statements imply Q4 revenue of about Rs11.74 billion versus Rs8.31 billion, gross profit of Rs3.61 billion versus Rs1.37 billion, and operating profit of Rs3.50 billion versus Rs1.06 billion. The resulting gross margin of roughly 30.8% and operating margin of roughly 29.8% are well above the full-year averages.

That quarter also benefited from the Rs355.7 million SIDC remeasurement gain. Excluding it, the derived Q4 operating margin would still be about 26.8%, leaving the core quarter exceptionally strong. Finance costs in the derived quarter fell to roughly Rs426 million from Rs559 million. Total group PAT swung from a derived loss of about Rs84 million to profit of about Rs2.59 billion, while profit attributable to owners rose to roughly Rs2.38 billion from Rs111 million.

These Q4 figures are useful, but they should not be treated as separately reported quarterly results. They are arithmetic residuals between audited full-year accounts and unaudited nine-month accounts, and the prior-period nine-month comparatives were restated. Year-end adjustments can therefore concentrate in the derived quarter. The next reported interim period will be the better test of whether a gross margin above 30% represents a new operating level or a particularly favorable year-end mix.

Cash flow and balance-sheet quality

Cash flow improved materially in FY2026. Cash generated from operations rose to Rs5.22 billion from Rs1.40 billion. After finance costs, taxes and other operating cash items, net operating cash flow was positive Rs2.20 billion compared with negative Rs1.61 billion in FY2025. Capital expenditure on property, plant and equipment was about Rs883 million, close to the prior year, and net investing cash outflow was Rs899 million.

Financing activity was almost neutral at a Rs31 million outflow, compared with a Rs945 million inflow in FY2025. The group paid Rs418 million in dividends, raised Rs3.20 billion of long-term financing and repaid roughly Rs2.94 billion. Cash and cash equivalents improved to negative Rs213 million from negative Rs1.49 billion, while the statement of financial position showed Rs944 million of cash and bank balances. These are different accounting presentation lines and should not be conflated; directionally, both the year-end cash position and the operating-cash-flow result improved versus FY2025.

The year-end balance sheet is therefore stronger, but not free of execution risk. Inventory and receivables rose faster than revenue, and the planned growth investments will require further capital. The encouraging offset is that short-term borrowings declined and operating cash flow turned positive despite that working-capital build.

Corporate developments beyond FY2026

Two post-year-end developments matter for the next cycle but were not FY2026 earnings drivers. In July, wholly owned subsidiary Global Packaging Films approved acquisition of a new metallizer at an estimated project cost of about Rs1.4 billion. The stated objective is to expand value-added metallized-film capacity, improve operating efficiency and support domestic and export demand. This fits the group’s mix strategy, but it also creates a future capex and execution requirement.

The group also decided to establish an indirect wholly owned subsidiary in Portugal through its Dubai-based IPAK Connect subsidiary, subject to approvals. The stated purpose is to strengthen commercial presence, customer engagement, marketing and distribution in Europe. This could support export development over time, but it should be treated as a future commercial initiative rather than evidence for FY2026 profitability.

Recurring versus exceptional earnings

Recurring-looking drivers are the higher utilization of the expanded group asset base, stronger export penetration, better product mix, operating efficiency and lower finance costs supported by improved cash generation. The public disclosures show these factors were already visible during the nine-month period and continued into the full year.

The items to treat separately are the Rs355.7 million SIDC remeasurement gain and the Rs452 million deferred-tax charge. The SIDC gain increased reported operating profit but is not a repeatable operating contribution. The deferred-tax charge reduced reported profit but was non-cash. The change in NCI also magnified the year-on-year change in total group PAT. Looking through all three, the underlying operating improvement remains large.

What to monitor next

Monitor whether gross margin normalizes from the derived Q4 level of about 30.8%. A next-quarter margin closer to the full-year 22.3% would still be healthy, but a sharp reversal would indicate that part of Q4 reflected favorable timing or mix.
Track stock-in-trade, trade receivables and short-term borrowings together. Growth becomes higher quality if sales and exports continue rising while inventory and receivables stabilize relative to revenue and bank borrowing remains contained.
Watch exports and subsidiary utilization. The group’s strategy is increasingly dependent on GPAK, PETPAK and CPAK operating efficiently and on value-added international sales growing without sacrificing pricing discipline.
Separate recurring operations from accounting items. A clean comparison should exclude any fresh SIDC-type remeasurement gains and should distinguish cash taxes from deferred-tax movements.
Monitor the Rs1.4 billion metallizer project and the Portugal subsidiary. Both are consistent with the value-added/export strategy, but the next reports should show their funding requirements, execution milestones and any impact on depreciation, working capital or financing.
Finance costs remain important. FY2026 demonstrated that IPAK could lower finance expense despite a larger business and a policy rate of 11.5% at year-end. Maintaining that discipline while funding growth would strengthen the durability of the earnings recovery.

Sources

International Packaging Films Limited / Pakistan Stock Exchange — official FY2026 audited financial-result attachment for the year ended June 30, 2026, including consolidated and standalone profit and loss, balance sheet, cash flow, dividend recommendation and deferred-tax disclosure. Open source.
International Packaging Films Limited / Pakistan Stock Exchange — official unaudited nine-month report for the period ended March 31, 2026, used for management commentary, subsidiary drivers, export data and the public basis for derived Q4 calculations. Open source.
International Packaging Films Limited — official company FY2026 update covering consolidated margins, exports, product-mix strategy, standalone performance and management’s near-term operating priorities. Open source.
Pakistan Stock Exchange — IPAK issuer page, used to verify company identity, fiscal year-end and the official September 10, 2026 FY2026 result announcement. Open source.
State Bank of Pakistan — official April 27, 2026 circular raising the policy rate to 11.5% effective April 28, used for the financing-cost backdrop. Open source.
Tri-Pack Films Limited / Pakistan Stock Exchange — official unaudited half-year and June-quarter 2026 result, checked as peer evidence for flexible-packaging film revenue and margin conditions. Open source.
International Packaging Films Limited / Pakistan Stock Exchange — July 22, 2026 material information on Global Packaging Films’ planned metallizer investment of approximately Rs1.4 billion. Open source.
International Packaging Films Limited / Pakistan Stock Exchange — July 31, 2026 material information on the proposed indirect wholly owned subsidiary in Portugal. Open source.