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Nimir Resins FY2026: Q4 Margin Expansion Drives the Profit Step-Up, but Cash Conversion Lags

Nimir Resins doubled FY2026 profit as margins expanded sharply, but negative operating cash flow and higher working-capital funding temper the finish.

Sep 17, 2026

Verdict: Nimir Resins Limited closed FY2026 with a much stronger earnings profile than a year earlier. Net sales rose 32.2%, gross profit increased 85.0% and operating profit more than doubled, while finance cost declined despite higher year-end short-term borrowing. The strongest part of the year was the final quarter: an annual-minus-nine-month bridge implies Q4 gross margin of about 22.8% versus 7.2% a year earlier and PAT of roughly PKR 261 million versus PKR 53 million. That is a meaningful operating acceleration, but the quality of the year was not uniformly strong. Net operating cash flow remained negative, inventory and receivables expanded, short-term borrowings rose, and the tax charge absorbed nearly half of pre-tax profit. FY2026 therefore looks like a genuine margin-and-volume recovery whose durability now depends on cash conversion and whether the exceptional Q4 spread can be sustained.

Results at a glance

Company Name: Nimir Resins Limited

Ticker: NRSL

Reporting period: year ended June 30, 2026. The primary analysis uses the company’s audited annual financial statements filed with PSX. The March 31, 2026 nine-month statements used to derive Q4 are expressly unaudited. The five-page annual result package labels the financial statements audited but does not contain the independent auditor’s report, so no audit-opinion wording is inferred.

Alpha QoQ Score: 93.21

TTM Performance Score: 93.88

3Y Business Perf Score: 73.90

Sector Leadership Score: 81.68

These four scores are AlphaGen model outputs, not company-reported figures.

What improved

The first improvement was sales volume. Management’s nine-month review said gross sales had risen 29% primarily because of higher sales volume and that the positive sales and profit trend was visible across all businesses. That matters because it gives the annual top-line growth an operating basis rather than leaving the increase to be explained only by price inflation.

Both operating segments participated. In the nine months to March 2026, Coating, Emulsion and Blending sales rose 35.8% to PKR 5.64 billion and segment result increased 42.4% to PKR 296.1 million. Textile, Paper and Others sales rose 19.8% to PKR 3.45 billion while segment result increased 23.5% to PKR 436.3 million. The business was therefore not relying on one product family to carry the year through March.

The margin step-up became much more pronounced in Q4. Subtracting the unaudited nine-month income statement from the audited annual result gives Q4 net sales of about PKR 3.15 billion versus PKR 2.23 billion a year earlier. Cost of revenue rose only about 17.7% while sales rose 41.5%, causing derived gross margin to expand to roughly 22.8% from 7.2%. Derived operating margin similarly increased to about 19.7% from 4.6%. The result package does not disclose a Q4 pricing-versus-input-cost bridge, so the exact cause of this unusually strong spread should not be overstated.

The annual financing line also improved. Finance cost fell to PKR 295.5 million from PKR 324.5 million even though short-term borrowings ended the year higher. Management had already attributed the 18% nine-month decline in finance cost to improved inventory management and a lower base rate. The broader monetary backdrop is consistent with that explanation: SBP’s policy rate stood at 11.5% in June 2026 after a substantial easing cycle from earlier levels.

The recovery also occurred against a mixed industrial backdrop. PBS reported that Pakistan’s overall large-scale manufacturing grew 4.98% in FY2026, but chemicals output declined 2.53% and chemical-products output declined 3.51%; textile output slipped 0.63%. Nimir Resins’ 32.2% annual net-sales growth and management-reported volume growth therefore outpaced the aggregate production direction of several relevant customer and product categories. This does not by itself prove market-share gains, but it makes the company-specific execution more notable.

What weakened / needs attention

The biggest counterweight is cash conversion. The audited cash-flow statement shows PKR 518.0 million of cash from operating activities before finance cost, tax and other operating payments, slightly below PKR 544.9 million a year earlier despite the sharp increase in accounting profit. After PKR 264.7 million of finance cost paid, PKR 396.9 million of income tax paid and other payments, net cash used in operating activities widened to PKR 189.5 million from PKR 100.0 million.

That weak cash conversion is visible in working capital. Inventory rose 14.7% to PKR 2.80 billion, trade debts rose 21.4% to PKR 2.79 billion and tax refunds due from government increased 34.7% to PKR 658.3 million. Trade and other payables increased only 5.9% to PKR 958.5 million. More cash was therefore tied up in operating assets even as reported profitability improved.

The final quarter did not solve this. At March 31, inventory was PKR 2.09 billion and trade debts PKR 3.03 billion. By June, inventory had risen by roughly PKR 711 million while receivables declined by about PKR 241 million. Using the annual and nine-month cash-flow statements together implies that only about PKR 54 million of the full-year PKR 518 million operating cash generation before financing, tax and related payments was produced in Q4. That is a derived figure, and the exact working-capital movements should be read from the eventual detailed annual notes, but it reinforces the gap between the strong Q4 P&L and cash realization.

Funding consequently remained important. Short-term borrowings increased 17.4% to PKR 2.42 billion from PKR 2.06 billion. Current liabilities rose 18.6% to PKR 3.84 billion, broadly in line with the 20.0% increase in current assets to PKR 6.61 billion, leaving the current ratio slightly better at about 1.72 versus 1.70. Liquidity is not visibly strained on this snapshot, but the business used more short-term financing while cash generation remained negative.

Tax was another major drag on the translation from operating profit to shareholders’ earnings. FY2026 taxation was PKR 448.7 million, compared with PKR 42.1 million a year earlier, and represented about 47% of pre-tax profit. In the nine-month report management highlighted an additional PKR 64 million super-tax charge relating to prior periods, which had already restrained PAT growth through March. The annual filing does not yet provide the detailed tax-note bridge, so the balance of the full-year increase should not be attributed without the annual report.

Recurring versus exceptional drivers

More recurring / operational: sales volumes across the coatings/emulsion and textile/paper businesses; product pricing and mix; raw-material and petrochemical costs; operating efficiency; inventory discipline; receivable collection; and finance costs on working-capital borrowing. The nine-month report directly supports volume growth and lower financing cost as meaningful FY2026 drivers.

More timing-sensitive / exceptional: the unusually high derived Q4 gross margin; prior-period super tax; year-to-year movements in other income; revaluation effects within equity and property, plant and equipment; and geopolitical shocks to petrochemical feedstock prices. Management specifically warned in March that Middle East conflict had lifted crude oil, petrochemical and other commodity costs, making input-cost volatility a continuing risk rather than a stable earnings tailwind.

Balance sheet and investment

Total assets rose 21.7% to PKR 8.24 billion and equity increased 22.8% to PKR 4.19 billion. Property, plant and equipment rose 27.0% to PKR 1.50 billion, but the increase should not be read as equivalent cash capex: the cash-flow statement shows only PKR 7.4 million of operating fixed-asset purchases and PKR 80.0 million added to capital work in progress during the year, while the statement of changes in equity also records a sizeable increase in revaluation surplus.

Cash and bank balances rose to PKR 203.7 million from PKR 152.3 million, but that increase was financed by the overall cash-flow mix rather than strong operating cash generation. Net cash from financing activities was PKR 316.8 million, driven mainly by a PKR 357.8 million net increase in short-term borrowings. The balance-sheet improvement in equity and profitability should therefore be considered alongside greater reliance on working-capital funding.

Historical pattern

FY2026 breaks a three-year pattern of shrinking profitability. PSX annual history shows PAT of roughly PKR 386 million in FY2023, PKR 270 million in FY2024 and PKR 249 million in FY2025 before the jump to PKR 503 million in FY2026. Sales moved from PKR 9.37 billion in FY2023 to PKR 8.58 billion in FY2024 and PKR 9.26 billion in FY2025 before reaching PKR 12.24 billion. The latest year therefore represents both renewed top-line expansion and a stronger conversion of sales into operating profit.

What to monitor next

  • Whether Q1 FY2027 gross margin remains materially above the roughly 14.1% FY2026 average after the derived Q4 margin reached about 22.8%. The annual filing does not explain how much of the Q4 spread came from pricing, product mix, raw-material costs or timing.
  • Sales volumes in both operating segments. Management attributed nine-month growth primarily to volume, while PBS data show relevant chemicals and textile manufacturing categories were soft at the industry level.
  • Inventory and receivables. Strong accounting earnings will be more convincing if the PKR 2.80 billion inventory balance and PKR 2.79 billion trade-debt balance begin converting into operating cash.
  • Short-term borrowing and finance cost. The financing line improved in FY2026, but short-term debt still rose to PKR 2.42 billion, so the next result will show whether lower rates can continue offsetting a larger funding base.
  • Tax normalization. The FY2026 effective burden was unusually heavy, and the detailed annual tax note will be important for separating recurring current tax, deferred tax and prior-period/super-tax effects.
  • Petrochemical input costs and domestic demand. Management flagged geopolitical pressure on crude-derived inputs and weak domestic demand as risks; these remain important for both gross margin and volume.

Bottom line

Nimir Resins delivered one of its strongest recent earnings years in FY2026. Volume-led growth through March, sharply better Q4 spreads and lower annual finance cost lifted operating profit above PKR 1.35 billion and doubled PAT. The quality question is cash: working capital absorbed funds, operating cash flow remained negative and short-term borrowings increased. The next cycle should therefore be judged less by whether revenue can keep growing at 30%-plus and more by whether the company can retain a meaningful portion of the Q4 margin improvement while converting profit into cash and keeping working-capital financing under control.

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