Kohinoor Industries’ FY2026 result is a story of income concentration, not textile manufacturing. The old yarn operation has been closed since 2008 and the company now leases its land and buildings. A major tenant’s exit cut rental income almost in half, pulling profit after tax down 50.3%. Other income kept the company profitable, but operating cash flow turned negative and no new dividend was declared. The balance sheet remains free of conventional bank debt and asset-rich, yet the earnings base needs a new tenant before the result can be called durable.
Results at a glance
Reporting basis: Kohinoor Industries Limited’s annual company financial statements for the year ended June 30, 2026, published through PSX. Figures are in Pakistani rupees and relate to the standalone listed company.
- Rental income: Rs43.52 million, down 49.3% from Rs85.83 million.
- Other income: Rs45.81 million, up 3.1% from Rs44.41 million. It exceeded rental income in FY2026.
- Operating profit: Rs42.13 million, down 53.2% from Rs90.07 million.
- Profit before levies and income tax: Rs43.00 million, down 53.5%. Profit after tax: Rs37.47 million, down 50.3%.
- EPS: Rs1.24, versus Rs2.49. No cash dividend, bonus issue or rights issue was recommended for FY2026.
- Net operating cash flow: negative Rs26.45 million, versus positive Rs26.28 million in FY2025.
AlphaGen model scores
These are AlphaGen model outputs, not company-reported figures: Alpha QoQ Score 74.92; TTM Performance Score 35.53; 3Y Business Perf Score 68.57; Sector Leadership Score 65.27.
What improved
The strongest part of the result is the financial position. Total liabilities fell to Rs48.08 million from Rs59.30 million, while total equity increased 1.3% to Rs1.122 billion. The face of the balance sheet shows no bank borrowings. Current assets of Rs188.41 million covered current liabilities of Rs39.62 million by about 4.8 times, improving from roughly four times a year earlier.
The company also held Rs137.79 million of short-term investments and Rs11.19 million of cash at year-end. Together, those balances were almost four times current liabilities. That liquidity cushion matters because the rental operation had a difficult year and cash generated by operations was insufficient to cover taxes, retirement-benefit payments and the prior-year dividend.
Investment property rose to Rs945.85 million from Rs923.30 million and represented about 81% of total assets. The March interim report describes this as land and buildings leased under operating-lease arrangements in Faisalabad. It also identifies a 22.5% equity-accounted interest in Kohinoor Power Company Limited. The FY2026 result recorded a Rs0.78 million share of loss from the associate, compared with a Rs2.46 million share of profit in FY2025.
The implied final quarter was better than the weak nine-month headline, although still below the prior-year quarter. Subtracting the official nine-month figures from the annual result gives Q4 profit after tax of Rs22.93 million, versus Rs33.34 million in Q4 FY2025. Other income of about Rs26.82 million supported that quarter, while implied rental income was only Rs7.37 million.
What weakened / needs attention
The main deterioration was occupancy. Management said in the March report that a major tenant had vacated space which had not yet been re-let because of prevailing economic conditions. Nine-month rental income had already fallen 43.8%; by year-end the full-year decline reached 49.3%. The implied fourth-quarter rental figure was Rs7.37 million, down about 65.7% from the corresponding calculation for FY2025.
This is not a volume-versus-price question in the conventional manufacturing sense. The disclosed cause is vacant leasable area. The missing decision-relevant detail is how much space became vacant, when the lease ended, what rent was lost, and whether negotiations with replacement tenants have progressed. Without those disclosures, the timing and economics of a recovery cannot be estimated responsibly.
The income mix also became less robust. Other income of Rs45.81 million was larger than rental income of Rs43.52 million. If other income were excluded, rental income would not have covered the Rs46.29 million of operating expenses and Rs0.90 million of other expenses. That is a simple arithmetic stress test rather than a restated profit measure, but it shows how dependent FY2026 earnings were on non-rental income.
The filing does not provide enough accessible detail to divide other income into recurring investment yield, mutual-fund gains, fair-value movements or other components. FY2025’s annual report attributed that year’s earnings improvement to mutual-fund profit and higher value of the associate investment. For FY2026, the safer conclusion is only that non-rental income remained material; its repeatability cannot be established from the extracted FY2026 schedules.
Operating expenses increased 22.7% to Rs46.29 million even as rental income halved. As a result, operating profit fell faster than revenue. Finance cost was negligible at Rs15,550, so leverage was not the reason for the earnings decline. The pressure came from the rental shortfall, higher expenses and a weaker associate contribution.
Cash flow and capital allocation
Accounting profit did not convert into operating cash. Cash used in operating activities was Rs26.45 million, a Rs52.73 million reversal from the Rs26.28 million inflow in FY2025. The nine-month filing had already shown negative operating cash flow of Rs17.64 million, driven by weak cash earnings, working-capital outflows and tax payments.
Liquidity was preserved through the investment portfolio. During FY2026 the company bought Rs282.83 million and sold Rs324.92 million of short-term investments, producing a net investing inflow of Rs42.09 million. It then paid Rs22.13 million in dividends, relating mainly to the prior year’s Rs0.75-per-share final dividend. Cash still declined by Rs6.50 million to Rs11.19 million.
The board recommended no new dividend for FY2026. That decision is consistent with negative operating cash flow and the uncertain vacancy period, even though the company retains substantial short-term investments. Investors should therefore separate balance-sheet liquidity from recurring cash generation: KOIL has liquid assets, but its current rental engine did not replenish cash during the year.
Balance-sheet quality and structural context
KOIL’s textile classification can be misleading. The company closed its yarn-manufacturing business in 2008 after operations became uneconomic, then expanded its objects to lease land and buildings. The current analysis should therefore focus on occupancy, rental yield, investment income and asset values—not cotton prices, yarn spreads or mill utilization.
The statement of financial position includes Rs353.68 million of loans from directors and other shareholders within equity. This presentation is important: the balance sheet reports no conventional financial debt, but a substantial portion of reported equity comes from sponsor funding classified there. The accessible result does not provide the terms needed to assess whether that funding is permanent, repayable or subordinated, so no stronger conclusion is warranted.
The investment property is carried at fair value. That makes independent valuation assumptions and occupancy evidence important even when no large revaluation gain appears in the headline profit. The property increased by Rs22.54 million during FY2026, but the extracted result does not state whether the movement came from revaluation, additions, transfers or another accounting change. It should not be treated automatically as recurring income or cash generation.
Longer-run perspective
FY2026 profit was not the weakest recent year, but it reversed FY2025’s jump. Profit after tax was Rs32.96 million in FY2022, Rs43.56 million in FY2023, Rs38.72 million in FY2024, Rs75.41 million in FY2025 and Rs37.47 million in FY2026. The five-year pattern is volatile because rental income, investment returns, associate results and tax movements do not move together.
The annual result also demonstrates why simple margins can mislead for this company. Rental income is reported as the revenue line, while other income is economically important and can equal or exceed it. A net margin calculated only against rental income was 86%, but that ratio does not mean the leased property itself earned an 86% margin. It includes investment and associate effects below or alongside the rental stream.
What to monitor next
- Re-letting progress: occupancy, lease commencement dates, rent per square foot and any incentives offered to replacement tenants.
- Rental recovery: whether quarterly rental income rises from the implied FY2026 Q4 level of Rs7.37 million.
- Other-income quality: the split between cash yield, realized gains, unrealized fair-value changes and one-off items.
- Cash conversion: whether operating cash flow returns to positive territory without further investment disposals.
- Investment property valuation: the basis for the Rs22.54 million increase and the valuation sensitivity to vacancy.
- Dividend capacity: whether a new payout becomes supportable after rental cash flow stabilizes.
Evidence limits
The official PSX result and nine-month filing support the core earnings, balance-sheet and cash-flow analysis. The annual report was transmitted through PSX, but its 25.1MB file exceeded the web extractor and direct session-aware shell access to PSX was unavailable under current network controls. Accordingly, this article does not state an audit-opinion conclusion or make unsupported claims about the composition of other income, property revaluation or the terms of sponsor funding.