Verdict
Pakistan Stock Exchange Limited’s audited consolidated FY2026 annual report shows a materially stronger exchange franchise. Total reported revenue rose 19.3%, administrative expenses increased only 4.8%, and operating profit nearly doubled. A buoyant market—higher traded value, more investors, more listings and much larger government Sukuk activity—fed directly into trading, listing, data and auction-fee income.
The strongest headline, however, needs context. Profit after tax increased 37.2% to PKR 2.241 billion, but PKR 2.024 billion of share-of-profit from associates—mainly CDC and NCCPL—represented about 72% of profit before levy and tax. PSX’s own operating business improved sharply, yet group earnings remain heavily influenced by market-infrastructure associates. The result is high quality at the operating line, but less diversified at the bottom line than the headline growth alone suggests.
Results at a glance
- Reporting basis: audited consolidated financial statements for the year ended June 30, 2026; figures below are PKR unless stated otherwise. FY2025 comparatives were restated.
- Consolidated revenue: PKR 2.937 billion, up 19.3% from PKR 2.461 billion.
- Operating profit: PKR 777.5 million, up 94.2%; operating margin widened to 26.5% from 16.3%.
- Share of profit from associates: PKR 2.024 billion, up 33.1% from PKR 1.521 billion.
- Profit before levy and tax: PKR 2.808 billion, up 37.6%. Profit after tax: PKR 2.241 billion, up 37.2%.
- Basic and diluted EPS: PKR 2.80 versus PKR 2.04. The board recommended a final cash dividend of PKR 1 per share.
- Operating cash flow: PKR 786.5 million, up 4.0%. Closing cash and bank balances: PKR 840.1 million, up 80.8%.
- AlphaGen model readings—not reported financial figures: Alpha QoQ Score 65.09; TTM Performance Score 89.43; 3Y Business Perf Score 93.10; Sector Leadership Score 71.33.
Basis and comparability
The article uses the consolidated statements because they capture PSX’s economic exposure to its market-infrastructure associates. The official group numbers differ slightly from unconsolidated figures shown elsewhere: consolidated FY2026 profit after tax was PKR 2.241041 billion, while the parent-only result was PKR 2.241275 billion. That difference is immaterial to the verdict, but mixing the two bases would make line-by-line comparisons unreliable.
FY2025 was restated after PSX corrected the accounting for its investment in Pakistan Mercantile Exchange Limited. PMEX is now treated as an associate under IAS 28 rather than as an IFRS 9 financial asset, with equity accounting applied retrospectively. Member deposits were also reclassified from non-current to current liabilities. The report says the PMEX correction increased FY2025 share-of-profit from associates by PKR 113.2 million. All year-on-year comparisons here therefore use the restated FY2025 figures.
What improved
Trading activity became the clearest operating engine. Trading-fee income rose 50.3% to PKR 1.076 billion. Management attributes that increase mainly to average daily traded value rising from about PKR 39 billion to PKR 59 billion. The market backdrop was unusually supportive: the KSE-100 closed FY2026 at 180,302, up 43.5% in rupee terms, while ready-and-futures traded value for the year reached PKR 14.196 trillion versus PKR 9.790 trillion.
The Exchange also broadened its revenue mix. Net listing fees increased 19.2% to PKR 911.2 million. Within that total, annual listing fees rose to PKR 662.7 million, initial listing fees to PKR 115.5 million and Sukuk auction fees to PKR 133.0 million. The latter grew 45.5% as PSX conducted 16 government Sukuk auctions that raised PKR 3.52 trillion, compared with PKR 2.21 trillion in FY2025.
Income from exchange operations rose 27.8% to PKR 1.817 billion. Trading fees supplied most of the increase, but facilities and equipment fees also rose to PKR 346.3 million and market-data fees increased 21.3% to PKR 337.7 million. Management says the data business added seven clients and launched an end-of-day product on Deutsche Börse’s marketplace. Those initiatives matter because data income is less directly tied to daily market turnover than trading fees.
The operating leverage was strong. Total reported revenue increased by PKR 475.2 million while administrative expenses rose by only PKR 98.1 million. Operating profit therefore increased by PKR 377.1 million to PKR 777.5 million, and the margin expanded by roughly 10.2 percentage points. Salaries and benefits remained the largest cost at PKR 1.105 billion, up 6.2%, while computer maintenance rose 21.6% to PKR 249.3 million. The cost increase appears consistent with an exchange investing in technology while processing much higher activity.
Associates supplied another major lift. PSX recognized PKR 2.024 billion of share-of-profit, up 33.1%. CDC contributed PKR 837.2 million and NCCPL PKR 1.011 billion; PMEX contributed PKR 151.4 million and E-Clear PKR 18.7 million, before small prior-year adjustments. The carrying value of associates rose to PKR 6.661 billion from PKR 5.330 billion even after PKR 945.7 million of dividends received from them. This is both an earnings advantage and a concentration to watch.
Balance-sheet capacity remained comfortable. Total assets increased 9.4% to PKR 16.512 billion and equity rose 9.2% to PKR 13.337 billion. The statements show no conventional short- or long-term debt. Current assets rose 5.1% to PKR 4.018 billion, although current liabilities increased faster—8.2% to PKR 3.076 billion—nudging the current ratio down to 1.31 from 1.34.
What weakened or needs attention
Not every income line benefited from stronger markets. Mark-up and interest income fell 38.6% to PKR 120.2 million because income from government securities declined to PKR 84.9 million from PKR 173.2 million. This reduced a non-operating tailwind, though it also means the earnings improvement was not driven by treasury income.
Other income fell to only PKR 6.6 million from PKR 119.8 million. FY2025 included PKR 91.5 million of liabilities written back and PKR 15.4 million of gains on fixed-asset disposals; those benefits largely disappeared. The decline makes the FY2026 operating improvement more credible, but it also shows why headline pre-tax growth should be reconciled rather than attributed solely to higher trading revenue.
Levies were broadly stable at PKR 235.3 million, but taxation increased 87.3% to PKR 332.0 million. Even so, profit after tax still rose 37.2%. The tax note indicates that the accounting profit includes associate income taxed at reduced rates and foreign-income effects, so a simple statutory-rate multiplication would not reproduce the reported charge.
Cash generation did not rise as quickly as earnings. Net operating cash flow increased only 4.0% to PKR 786.5 million, well below PKR 2.241 billion of profit after tax. This is not automatically a cash-conversion warning because PKR 2.024 billion of equity-accounted associate profit is non-cash when recognized; dividends received from associates appear in investing cash flow instead. PSX received PKR 948.8 million of dividends and reported PKR 934.1 million of net investing inflow. The correct reading is that associate distributions are important to group liquidity, not that all accounting profit should appear in operating cash flow.
Cash dividends paid during FY2026 were PKR 1.345 billion versus PKR 784.0 million in FY2025. Despite that outflow, cash and bank balances increased to PKR 840.1 million, supported by operating cash and associate dividends. The board’s proposed final dividend of PKR 1 per share should be viewed alongside this already significant cash distribution history.
The earnings mix also remains cyclical. Trading fees depend on market activity, while CDC and NCCPL profits are themselves linked to the depth and velocity of Pakistan’s capital markets. Data vending, listings and Sukuk auctions are growing, but they are not yet large enough to offset a severe turnover contraction. The report also discloses uncertain Sindh sales-tax matters; management recognized no provision because the basis and amount could not be measured reliably. That is a disclosed contingency, not a quantified liability.
Longer-run perspective
FY2026 extends a striking recovery. Consolidated profit after tax was PKR 220 million in FY2023, PKR 1.028 billion in FY2024, a restated PKR 1.634 billion in FY2025 and PKR 2.241 billion in FY2026. Operating profit moved from PKR 112.8 million in FY2024 to PKR 400.5 million in FY2025 and PKR 777.5 million in FY2026. Return on equity reached roughly 17.5%, up from 13.8%, while the Exchange’s investor base expanded 48% to 583,052 UINs.
The structural achievements are relevant but should not be treated as automatic future earnings. PSX moved equities to T+1 settlement in February 2026, recorded 11 Main Board listings raising PKR 18.39 billion, relaunched cash-settled futures and expanded government-debt activity. These developments deepen the platform and can widen fee pools; their financial value still depends on sustained issuer participation, investor activity and successful product adoption.
What to monitor next
- Trading-fee durability: whether average daily traded value remains near FY2026’s record level after the strong market run.
- Revenue diversification: growth in market-data, facilities, listings, debt-market auctions and new products relative to trading fees.
- Associate concentration: CDC and NCCPL were the two largest contributors to associate profit, and associate income remained larger than PSX’s own operating profit.
- Cost discipline: technology spending is strategically necessary, but administrative expense growth needs to remain below core revenue growth to preserve the wider margin.
- Cash realization and payouts: dividends received from associates, operating cash flow and the cash cost of shareholder distributions should be assessed together.
- Tax and regulatory contingencies: the treatment of levies, the effective tax rate and any development in Sindh sales-tax matters could affect reported profit.
Evidence assessment
PASS. The exact company, audited period, consolidated basis, restated comparatives and principal earnings lines were verified in the official annual report and result announcement. The filings provide enough detail to explain the material earnings movements, associate contribution, balance-sheet position and cash flows. AlphaGen returned eight annual and 30 quarterly statement dates, with ratio history through the latest period; operating KPI history was unavailable, so this analysis uses the issuer’s disclosed trading, listing, Sukuk and investor statistics rather than unsupported KPI extrapolation.