Stylers International Limited (STYLERS) closed the year ended June 30, 2026 with a mixed but defensible result: lower sales and profit, yet a slightly stronger gross margin, solid cash generation and a net-cash balance sheet. The headline is not an earnings growth story. Revenue fell 8.9% to PKR 18.89 billion and profit after tax fell 13.2% to PKR 1.11 billion. The more constructive part is that the company protected unit economics while a major capacity addition was still ramping up.
The audited standalone financial statements show gross margin rising to 18.83% from 18.43%, which management attributes to a more profitable customer mix. Fourth-quarter revenue and gross profit also returned to year-on-year growth. That said, full-year operating profit, pre-tax profit and earnings per share all declined, while inventory rose and operating cash flow moderated. Investors should therefore read FY2026 as a year of margin resilience and capacity investment—not as a completed earnings recovery.
Results at a glance
All figures below are from the company’s audited standalone financial statements for the year ended June 30, 2026; monetary amounts are in Pakistani rupees unless stated otherwise.
- Revenue: PKR 18.89 billion, down 8.9% from PKR 20.73 billion.
- Gross profit: PKR 3.56 billion, down 6.9%; gross margin improved by 40 basis points to 18.83%.
- Operating profit: PKR 2.12 billion, down 7.4%.
- Profit before levy and tax: PKR 1.74 billion, down 10.1%.
- Profit after tax: PKR 1.11 billion, down 13.2%; EPS fell to PKR 2.26 from PKR 2.61.
- Net operating cash flow: PKR 2.34 billion, down 36.2%, but still more than twice reported profit.
- Year-end cash: PKR 1.70 billion against PKR 1.00 billion of debt, leaving about PKR 695 million of net cash.
- Total FY2026 cash dividend recommended or paid: PKR 1.50 per share, versus PKR 1.00 for FY2025.
AlphaGen model scores
These are AlphaGen model outputs, not figures reported by Stylers International. They summarize different performance horizons and relative positioning; they should not be read as investment advice.
- Alpha QoQ Score: 60.41
- TTM Performance Score: 10.38
- 3Y Business Perf Score: 22.69
- Sector Leadership Score: 68.12
What improved
The clearest improvement was gross-margin defense. Revenue declined by PKR 1.84 billion, but cost of sales fell slightly faster, by 9.3%, allowing gross margin to rise from 18.43% to 18.83%. Management explicitly links the improvement to a more profitable customer mix. That is important because the company was simultaneously absorbing higher depreciation and fixed manufacturing costs from the Sunshine facility expansion.
Distribution costs also fell sharply, by 27.2% to PKR 679 million. The notes show that outward freight and handling dropped to PKR 70 million from PKR 232 million; claims on export sales halved to PKR 67 million; and export-development surcharge fell to PKR 16 million from PKR 52 million. The filing does not quantify how much of those changes came from rates, shipment terms, mix or timing, so it would be unsafe to assume the entire reduction is structural. Still, the arithmetic materially softened the effect of lower sales.
The final quarter was better than the full-year direction. On a discrete-quarter basis, revenue increased 6.7% year on year to PKR 5.17 billion and gross profit rose 11.3% to PKR 1.08 billion. Gross margin improved to about 20.86% from 20.00%. Operating profit was broadly flat at PKR 548 million, however, and profit after tax slipped 2.1% to PKR 336 million. The quarter suggests improved trading momentum, but not yet a full conversion into bottom-line growth.
Capacity also moved forward. The Sunshine Manufacturing Facility added 5,000 pieces per day, roughly a 14% increase, taking the site to around 75% of its planned Phase-I capacity. Across the company, disclosed garment capacity rose to 10.52 million pieces from 8.96 million, while actual production reached 11.29 million pieces from 10.53 million. The company says actual output exceeded standard capacity through efficiency gains and a different product mix. A further 564 kW of solar generation capacity was added during the year.
What weakened or needs attention
The central weakness is that improved gross margin did not prevent earnings contraction. Operating profit fell 7.4% because gross profit was lower in absolute terms and administrative and other expenses increased. Administrative expense rose 8.5% to PKR 715 million, including a large rise in fees and subscriptions and higher depreciation. Other expenses increased 25.5% to PKR 272 million, reflecting PKR 35 million of doubtful supplier advances, a PKR 28 million sales-tax refund write-off and higher donations.
Finance and other charges rose 7.0% to PKR 379 million. These costs are not conventional bank-interest leverage alone: the note identifies PKR 253 million of bank charges and commission and PKR 126 million of musharakah rent or profit. Higher depreciation also matters. Total depreciation and amortization rose to about PKR 645 million from PKR 490 million, while EBITDA was almost flat at PKR 2.76 billion. This explains why operating profit weakened more than underlying cash-style operating earnings during the expansion ramp-up.
Tax remained a heavy claim on earnings. The tax charge was PKR 636 million, including current tax, a small prior-year adjustment and PKR 66 million of deferred tax. Profit before income tax fell 9.5%, while profit after tax fell 13.2%. The notes also say exporters moved from the final-tax regime to the normal-tax regime from July 2024, and that the Finance Act 2026 removed super tax for exporters meeting an 80% export-proceeds threshold from July 2026. The future benefit cannot be quantified from the FY2026 accounts and should not be treated as booked upside.
Customer and geographic concentration are material. Europe generated PKR 18.02 billion of revenue, about 95% of the total, and the report says one customer represented 50.97% of sales, up from 42.62%. Export sales themselves fell to PKR 18.17 billion from PKR 20.40 billion. A stronger customer mix helped margins, but dependence on one customer and one region increases sensitivity to order timing, consumer demand and commercial terms.
Working capital requires a balanced reading. Inventory increased 26.6% to PKR 2.68 billion, absorbing PKR 567 million of cash. Against that, trade receivables fell 29.6% to PKR 1.45 billion and released PKR 715 million, while payables added PKR 571 million to cash flow. The net working-capital movement in the cash-flow statement was slightly positive, but the inventory build and reliance on higher payables deserve monitoring as the expanded facility fills.
Cash flow, balance sheet and dividend
Cash generation remained a real strength, even though it weakened. Net operating cash flow was PKR 2.34 billion compared with PKR 3.67 billion a year earlier. Subtracting PKR 1.025 billion of property, plant and equipment purchases and PKR 4 million of intangible investment leaves approximately PKR 1.31 billion—consistent with the free-cash-flow-to-equity measure used internally by AlphaGen. This calculation excludes the PKR 308 million long-term investment outflow, so it should not be confused with the total change in cash.
Investment spending moderated after the prior year’s large build: total investing outflow fell to PKR 1.33 billion from PKR 2.95 billion. Dividends paid increased to PKR 733 million. Even after investment and financing outflows, cash increased by PKR 276 million to PKR 1.70 billion. Total assets rose 5.0% to PKR 21.11 billion and equity rose 1.7% to PKR 13.95 billion.
Liquidity is comfortable but not improving on every measure. Cash exceeded the PKR 1.00 billion debt balance, and the company had no short-term borrowing at year-end. However, current liabilities rose faster than current assets, reducing the current ratio to about 1.60 times from 1.67 times. Trade and other payables climbed 12.0% to PKR 5.43 billion. The balance sheet therefore supports the expansion, but the cash cushion should be viewed alongside rising operating liabilities.
The board recommended a final cash dividend of PKR 0.75 per share, in addition to PKR 0.75 of interim dividends, taking the FY2026 total to PKR 1.50 per share. That equals roughly 66% of reported EPS of PKR 2.26. Management says the recommendation balances shareholder returns with Project Sunshine’s capital-expenditure and working-capital needs. The final dividend remains subject to shareholder approval at the October 27, 2026 annual general meeting.
What to monitor next
First, watch whether the fourth-quarter sales recovery carries into FY2027 and whether the improved customer and product mix can hold gross margin near or above FY2026’s 18.83%. The report does not provide a volume-price-mix bridge for the revenue decline, so future quarterly disclosures will be needed to distinguish demand recovery from mix and timing.
Second, monitor Sunshine utilization. Management expects the higher depreciation and fixed-cost burden to be absorbed through greater capacity utilization and operating leverage. The existing expansion reached around 75% of Phase-I planned capacity, while a separate board-approved “5K Expansion Project” was announced in February 2026. The company had not finalized that project’s cost, schedule or commissioning date in the announcement, so those details remain a genuine information gap rather than an assumption to fill.
Third, track customer concentration, inventory and cash conversion together. Winning higher-margin orders is valuable, but one customer accounting for more than half of sales raises execution risk. Inventory growth may be reasonable ahead of larger production, but it should eventually translate into shipments, receivable collection and operating cash rather than persistently higher payables.
Finally, watch the effective tax burden and finance-related charges. The FY2026 accounts describe tax-law changes that may affect exporters after year-end, but the cash and accounting impact is not yet demonstrated. Bank charges, commissions and musharakah profit also remain large enough to influence the gap between operating profit and net earnings.
Verdict
FY2026 was resilient, not strong. Stylers preserved gross margin, generated more cash than accounting profit, retained net cash and completed meaningful capacity additions. But revenue, operating profit, pre-tax profit and EPS all declined, and customer concentration increased. The final quarter provides an encouraging signal, while Sunshine offers operating leverage if orders fill the added capacity. The next result needs to prove that the new capacity and better mix can lift absolute earnings—not merely protect margins during a lower-revenue year.
Primary sources
Stylers International Limited FY2026 annual report — audited standalone financial statements, directors’ report and operating disclosures.
PSX FY2026 financial-results announcement — result and dividend announcement dated September 28, 2026.
PSX company announcements page — official announcement chronology.
Stylers investor-relations financial-reports page — issuer-hosted report index.
PSX 5K Expansion Project announcement — board approval and disclosed financing approach.