Verdict
Rafhan Maize Products Company Limited delivered a materially stronger third quarter even though sales slipped. For the quarter ended September 30, 2026, revenue fell 2.1% year on year, but cost of sales declined 5.7%. That widened gross margin by 3.14 percentage points and lifted profit after tax by 26.4%. The earnings improvement is real and visible across gross, operating and net profit. The weaker part of the result is cash conversion: the nine-month cash-flow statement reports a Rs9.35 billion operating cash outflow, while inventories and receivables rose and short-term financing increased sharply.
The core verdict is therefore balanced. Profitability recovered in the quarter, and nine-month profit growth reached double digits, but the balance sheet had to support a much heavier working-capital burden. The filing does not disclose a current-quarter volume, pricing, product-mix or raw-material bridge, so the defensible explanation is arithmetic rather than speculative: production and purchasing costs fell faster than revenue, while administrative and finance costs absorbed part of the gain.
Reporting basis
The figures below come from the company’s unaudited standalone financial statements for the quarter and nine months ended September 30, 2026. Amounts are presented in Pakistani rupees and the filing’s primary tables are in Rs thousand. Quarterly comparisons are against the quarter ended September 30, 2025; nine-month comparisons are against the first nine months of 2025. Balance-sheet movements compare September 30, 2026 with December 31, 2025.
Results at a glance
- Quarterly revenue: Rs18.52 billion, down 2.1% from Rs18.91 billion.
- Quarterly gross profit: Rs3.46 billion, up 17.7%; gross margin improved to 18.66% from 15.52%.
- Quarterly operating profit: Rs2.74 billion, up 21.4%; operating margin rose to 14.82% from 11.95%.
- Quarterly profit before tax: Rs2.45 billion, up 21.8%.
- Quarterly profit after tax: Rs1.55 billion, up 26.4%; earnings per share increased to Rs167.51 from Rs132.48.
- Nine-month revenue: Rs56.70 billion, up 2.3%; nine-month profit after tax: Rs5.66 billion, up 11.2%.
- Nine-month operating cash flow: an outflow of Rs9.35 billion versus an outflow of Rs4.55 billion a year earlier.
What improved
The clearest improvement was at gross profit. Quarterly revenue decreased by Rs397 million, but cost of sales fell by Rs917 million. The gap between those two movements added roughly Rs520 million to gross profit, which rose to Rs3.46 billion from Rs2.94 billion. This is why gross profit could grow 17.7% despite lower sales.
The margin effect was substantial. Gross margin reached 18.66%, up from 15.52%, a 3.14 percentage-point expansion. The filing does not attribute this change to volumes, pricing, maize costs, energy, product mix or exports. It would therefore be unsafe to assign the improvement to any one of those factors. What can be said is that the cost base represented a smaller share of sales in the quarter.
The gross-profit gain flowed through to operating earnings. Distribution expenses rose only 2.1% to Rs294 million, although administrative expenses increased 15.5% to Rs486 million. Other income rose 29.7% to Rs258 million, while other expenses increased 15.1% to Rs190 million. Taken together, distribution, administration and net other expense increased by about Rs37 million—far less than the Rs520 million gross-profit improvement. Operating profit consequently increased 21.4% to Rs2.74 billion, and operating margin widened by 2.87 percentage points to 14.82%.
Profit after tax grew faster than operating profit. Finance cost increased 18.1% to Rs295 million, so financing was a headwind, but the quarterly effective tax rate eased to 36.83% from 39.15%. Profit before tax rose 21.8%, while tax expense increased 14.6%, allowing net profit to rise 26.4% to Rs1.55 billion. Net margin improved to 8.36% from 6.47%.
The nine-month view confirms that the improvement was not confined to a single profit line. Revenue increased 2.3% to Rs56.70 billion, gross profit rose 7.1% to Rs11.35 billion, and operating profit increased 6.0% to Rs9.49 billion. Nine-month gross margin improved to 20.02% from 19.12%, while operating margin rose to 16.73% from 16.14%. Finance cost declined 8.5% over the nine months, helping profit before tax rise 7.3%. With tax expense almost flat, profit after tax increased 11.2% to Rs5.66 billion and nine-month EPS reached Rs612.94.
What weakened / needs attention
Revenue momentum remains modest. The third-quarter decline contrasts with the 2.3% increase for the nine months, implying that growth slowed late in the period. Without a current volume and pricing bridge, it is not possible to distinguish softer demand from a pricing or product-mix effect. That missing split matters because margin expansion driven by temporary input-cost relief has a different durability from expansion driven by better mix, utilization or structural efficiency.
Administrative expenses grew 15.5% in the quarter and 10.0% over nine months, both well ahead of revenue. Distribution expense also increased 8.2% over nine months. These costs did not prevent earnings growth because gross profit improved, but they reduce the amount of gross-margin recovery reaching shareholders.
Quarterly finance cost increased to Rs295 million from Rs250 million. The nine-month finance-cost line was lower year on year, but the September balance sheet shows why financing deserves close attention going forward: short-term financing climbed to Rs14.27 billion from Rs8.32 billion at December 2025. The quarter’s stronger profit therefore should not be read in isolation from the company’s higher reliance on short-term funding.
Cash conversion and balance sheet
Cash conversion was the principal weakness. Net cash used in operating activities was Rs9.35 billion in the first nine months of 2026, compared with Rs4.55 billion in the same period of 2025. The deterioration was about Rs4.80 billion. The balance sheet gives a coherent picture of the pressure: inventories increased by Rs6.36 billion to Rs35.53 billion, trade receivables rose by Rs2.38 billion to Rs5.74 billion, and trade payables fell by Rs6.33 billion to Rs11.31 billion.
Those movements do not, by themselves, provide a complete cash-flow reconciliation, but together they show why accounting profit did not translate into cash. More funds were tied up in stock and customer balances while supplier financing decreased. Taxes paid were Rs3.79 billion, versus Rs3.30 billion a year earlier, adding to the operating outflow.
Investment also required more cash. Capital expenditure increased about 70% to Rs1.62 billion from Rs949 million, and property, plant and equipment rose by Rs1.08 billion from year-end to Rs12.66 billion. The abbreviated filing does not identify the projects or expected returns, so the spending should be viewed as capacity and asset investment without assigning a specific growth payoff.
Liquidity shifted materially. Cash on the balance sheet fell to Rs815 million from Rs4.14 billion, while short-term investments declined to Rs5.34 billion from Rs8.40 billion. At the same time, gross interest-bearing borrowings—short-term financing plus the disclosed current and non-current long-term facilities—rose to roughly Rs14.61 billion from Rs8.70 billion. Against cash and short-term investments, this implies a move from approximately Rs3.84 billion of net cash at December 2025 to about Rs8.46 billion of net debt at September 2026.
The company still reported positive working capital of Rs21.32 billion and a current ratio of about 1.74 times, modestly above 1.69 times at year-end. However, the quick ratio excluding inventories and stores fell to roughly 0.44 times from 0.59 times. That distinction is important: headline current assets increased, but liquidity became more dependent on converting inventories and receivables.
The cash-flow statement reports closing cash and cash equivalents of negative Rs10.04 billion, while the balance sheet separately reports positive cash of Rs815 million. There is not necessarily a contradiction: cash equivalents commonly net certain bank overdrafts or short-term facilities. But the abbreviated result omits the referenced Note 11, so the exact composition cannot be verified from this filing. The negative cash-equivalent figure should not be treated as identical to the balance-sheet cash line.
Historical and business context
Rafhan Maize converts maize into industrial starches, liquid glucose, dextrose, dextrin and related co-products for customers across food, paper, textile, pharmaceutical and other industries. The company’s FY2025 corporate briefing described three manufacturing facilities and a single operating segment, with domestic sales supplemented by exports. That business profile makes plant utilization, maize procurement, energy cost, product mix and export demand economically important, but the current result does not quantify their individual contribution.
The earlier FY2025 briefing reported a 5% decline in volume to 542,000 tonnes and a fall in annual gross margin to 18.8% from 20.9%, including disclosed one-off pressures. The current quarter’s 18.66% gross margin is therefore a clear recovery from the weak third quarter of 2025, but it remains close to the full-year 2025 level and below the 2024 annual margin. The 20.02% nine-month margin is more encouraging, though still not proof that the prior peak has been structurally restored.
AlphaGen model scores
These are AlphaGen model outputs, not figures reported by Rafhan Maize and not investment recommendations:
- Alpha QoQ Score: 32.92
- TTM Performance Score: 52.60
- 3Y Business Perf Score: 51.91
- Sector Leadership Score: 51.33
The scores paint a mixed picture. The low quarterly score contrasts with the stronger year-on-year earnings result because the model evaluates a broader set of sequential and operating signals. The TTM, three-year and sector-leadership readings are near the middle of their scales, consistent with a company showing profitability recovery but also meaningful cash-conversion and balance-sheet pressure.
What to monitor next
- Whether revenue returns to growth and whether management discloses the split between volume, pricing, mix and exports.
- Whether gross margin can remain near the nine-month level as maize, energy and other input conditions change.
- Inventory and receivable conversion, especially whether operating cash flow recovers from the Rs9.35 billion nine-month outflow.
- Short-term financing and finance cost after the sharp rise in borrowings at September 2026.
- The purpose and earnings contribution of higher capital expenditure.
- Any fuller disclosure reconciling the negative cash-equivalent balance with cash and short-term financing.
Evidence limitations
This is a pass with disclosed limitations. The official filing verifies the current earnings, balance sheet and nine-month cash flow, but it is an abbreviated five-page result and does not include detailed notes or management commentary. It does not disclose current volumes, pricing, product mix, raw-material costs, energy costs, export contribution or plant utilization. Accordingly, the article explains the verified financial transmission and avoids unsupported company-specific causal claims.
The statement of changes in equity also contains a mismatch between the printed per-share amount and total amount for one interim-dividend line. Because that inconsistency is not needed to assess earnings and cash conversion, this article does not quote an aggregate interim-dividend rate. It does not affect the core result, but a fuller interim report would be needed to resolve it.
Primary sources
PSX: RMPL unaudited financial results for the quarter and nine months ended September 30, 2026
PSX company page: Rafhan Maize Products Company Limited